Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

GREATER NOTTINGHAM LIGHT RAPID TRANSPORT BILL

Read the Third time, and passed.

Oral Answers to Questions — EDUCATION

University Places

Mr. Wicks: To ask the Secretary of State for Education if he plans to meet the Committee of Vice-Chancellors and Principals to discuss the places available in universities for students leaving school in the current year with appropriate A-level qualifications.

Mr. Nigel Griffiths: To ask the Secretary of State for Education what discussions he has had with principals and vice-chancellors about the funding of universities.

The Parliamentary Under-Secretary of State for Further and Higher Education (Mr. Tim Boswell): I am sorry that my right hon. Friend the Secretary of State for Education is unable to be on the Front Bench for oral questions this afternoon.
We meet the Committee of Vice-Chancellors and Principals from time to time to discuss a range of matters affecting universities. My right hon. Friend and I intend to meet members of the Committee of Vice-Chancellors and Principals later this month.

Mr. Wicks: Has the Minister noted the concern of the universities and university authorities that, this year, some well-qualified young people with good A-level grades will not he able to go to university? If that assumption is true—I ask him to confirm or reject it—what message does that give to young people who have worked hard but cannot get into university? What message does it give to young people when we need well-trained and well-educated youngsters?

Mr. Boswell: The first message that I would give young people is to remind them that student numbers, on a full-time equivalent basis, have expanded by 46 per cent. during the past four years. We have more students and a higher proportion of our young people in higher education than ever before. There is some consolidation at present, which is an opportunity for universities to catch breath after rapid expansion and to assert the importance of the full quality of entry standards, to which we attach considerable importance.

Mr. Nigel Griffiths: Will the Minister confirm that the Higher Education Funding Council is encouraging universities not to take arts students this year, and that it is spending up to £3·5 million encouraging them not to do so, as a kind of academic set-aside? What does that say for the Government's policy towards broad education across a range of subjects?
Is this not the first time in the United Kingdom that a Government have decided to restrict the number of students taking courses, and to channel students away from a broad range of courses—including arts, which are very valuable—into more technical subjects?

Mr. Boswell: It is difficult to please everyone on such subjects, but I remind the hon. Gentleman that the changes in tuition fees earlier this year referred to expansion at the margin beyond the funded number of places. There is no question of prohibiting people from going for arts or humanities subjects—far from it. There is a higher level of participation in those subjects than ever before. If the funding council, which has discretion in the matter, decides to set aside a proportion of money to meet the particular problems of institutions that have expanded so quickly, that is its decision, but I think that it is a prudent one.

Mr. John Marshall: When my hon. Friend meets the principals and vice-chancellors, will he pay a particular tribute to the work of the former polytechnics, such as Middlesex university in my constituency? Will he also draw attention to the fact that, three years ago, those people who are complaining about a shortage of places said that the introduction of student loans would result in a reduction in the numbers of people going to university?

Mr. Boswell: I shall, as ever, do both those things.

Mr. James Hill: When my hon. Friend visits Southampton, he will be able to recall some of the whingeing words of Opposition Members when he sees the college of higher education, La Sainte Unione and the university of Southampton moving ahead with increased numbers of students, and expanding on other sites.

Mr. Boswell: I cannot wait to receive an invitation from my hon. Friend, and I will do my best to respond to it positively as soon as possible.

Mr. Beggs: When the Minister meets the Committee of Vice-Chancellors and Principals, will he discuss the dramatic increase in student numbers but the absence of corresponding increases in the numbers of lecturers, and lecturers' concern that there could be a slump in standards?

Mr. Boswell: I understand the hon. Gentleman's point. It is certainly the case that numbers of students have expanded faster than the number of lecturers. It varies from place to place and situation to situation and, in some respect, it can be interpreted as productivity.

Mr. Devlin: Will my hon. Friend telephone the Secretary of State this afternoon and wish him a speedy return to good health, and remind him that it is a source of great pride among Conservative Members that this country spends a higher proportion of its gross domestic product on higher education than either Germany or Japan, righting a long-term situation that has needed correction for some time?

Mr. Boswell: I am sure that the wise remarks of my hon. Friend will help speed up the return to good health of the Secretary of State.

Mr. Rooker: Will the Minister make an early response to the letter that he has received from the Committee of Vice-Chancellors and Principals asking for an extension to the consultation process about the funding of student unions to 1 November following the statement made on 1 July?
The Minister was careful to talk about full-time equivalent places when he answered my hon. Friend the Member for Croydon, North-West (Mr. Wicks). Is it right to fund some universities for not filling full-time places and, at the same time, refuse to assist the University of Central England in Birmingham, which is undergoing a vast expansion of part-time places for which there are no taxpayers' contribution to fees or mandatory grants and is funding them free for students who happen to be unemployed? Will he do something about the unfair mismatch of the funding regulations between full-time and part-time university students?

Mr. Boswell: On the hon. Gentleman's first point, I can assure him that the letter we received this morning will be carefully considered, and we will respond to it as soon as possible.
The hon. Gentleman has made clear in the past the views expressed in his second point. We have no proposals for the complete restructuring of the system of academic support at present. We recognise that we have greatly expanded the numbers in higher education, significantly in the new universities, including the ones to which the hon. Gentleman referred, as well as the older universities.
We have also quickly expanded, and are continuing to expand, further education. It is always possible to make suggestions, and they will be considered. We believe that we are delivering the goods in the structure that we have in place.

Teacher Testing

Mr. David Evans: To ask the Secretary of State for Education what plans he has to test teachers.

The Parliamentary Under-Secretary of State for Schools (Mr. Eric Forth): Under the appraisals regulations 1991, all teachers in maintained schools must be subject to an appraisal of their performance by 1995.

Mr. Evans: Does the Minister agree that teachers should be given a simple test to tell us the difference between the Labour party conference, the Trades Union Congress and the National Union of Teachers conference? They are all a lot of hooligans who jump up and down and sulk when they are asked to do any work. Is the Minister aware that a certain hon. Member who has driven us mad over the years has been learning to drive this morning? Would not it be a good idea if that whole lot over there, and some of the teachers had L plates round their necks?

Mr. Forth: I welcome my hon. Friend's sound endorsement of the principle of teacher appraisal. It must be right that teachers undergo a form of appraisal in a properly structured and agreed form, but I am not sure whether that includes the questions that my hon. Friend suggested. Appraisals should be carried out to assure the

highest quality of teaching, by identifying the full potential of teachers and meeting their training, retraining and support needs. That is the objective.

Mr. Steinberg: In response to that predictably silly outburst from the hon. Member for Welwyn Hatfield (Mr. Evans), does the Minister agree that the hon. Gentleman would have great difficulty in passing the present standard assessment tasks, and does he also agree that the vast majority of today's teachers are far better skilled than they were in the days when the hon. Gentleman went to school?
Now that the opinions of teachers on testing have been vindicated, would the Minister please listen to the teachers during consultation over the new arrangements for primary school teachers?

Mr. Forth: It is certainly the case that properly structured and developed appraisal of teachers must be a major contribution to the quality of our education. It is a matter of some regret that a union that is not totally unconnected with the hon. Gentleman is persisting in opposing the principle of teacher appraisal. I know not why it is doing so—it is for the union to explain—but the rest of us are entitled to be a little suspicious.

Dr. Twinn: I thank my hon. Friend for his comments about teacher appraisal. To enable teachers to pass his appraisal system, will he place further emphasis during teacher training on more practical classroom skills and more subject-based knowledge?

Mr. Forth: My hon. Friend has unerringly put his finger on one of the main thrusts of the Secretary of State's proposals. Of course it must be right that all training of teachers must lay the maximum emphasis on practical classroom skills, so that we do not rely entirely on paper qualifications, important though they may be, but identify the ability of teachers to educate in the classroom. That would emanate from my hon. Friend's sensible suggestions.

Mr. Don Foster: Following the recent revelations about masonic lodges linked to schools in Conservative-controlled Buckinghamshire, does the Minister think that teachers and governors should be tested on their membership of secret societies?

Mr. Forth: Given that we are sitting in a Chamber which probably contains more secret and semi-secret societies than any other, I should be careful before embarking on throwing stones from this glass house.

Mr. Patrick Thompson: In connection with teacher training and assessment, does my hon. Friend agree that schools should be given more time and a greater role in planning and assessing such courses? Does he agree that, in that connection, there should be less stress on educational and sociological theory and more stress, as my hon. Friend the Member for Edmonton (Dr. Twinn) said, on subject knowledge, classroom skills and, in particular, classroom discipline?

Mr. Forth: Indeed. My hon. Friend shows yet again his enormous experience in this area, to which I defer. It must be right that the balance between theoretical and academic training, which must always have its place, and practical hands-on experience in the classroom is constantly reassessed. I am sure that my hon. Friend will fully support the recommendations and proposals that my right hon.


Friend the Secretary of State has made recently, which we are now developing very much in the direction suggested by my hon. Friend.

Mrs. Ann Taylor: As the Minister has acknowledged that the quality of teachers is important, why are the Government proposing to dilute the professionalism of teachers by the introduction of a semi-trained mums' army? Although we all want mature entrants into teaching, surely it is important that those who are entrusted with our children's education are highly educated and well trained. Why are Ministers gambling with our children's future by more crackpot experiments?

Mr. Forth: I approach this in sorrow rather than anger. It is sad that the hon. Lady should assume that the possession of a paper qualification automatically gives someone skills in classroom teaching and, worse, that she should suggest that people who do not possess academic qualifications, such as graduate skills, are in some way less than good in the classroom.
The reality is that 50 per cent. of teachers are graduates. Is the hon. Lady suggesting that half of all teachers are incompetent and unable to operate successfully in the classroom? Our proposals are that intelligent and mature people with two A-levels and considerable experience with children should surely be the sort of people that we want to encourage to come into our classrooms and deal with our young people—rather than relying entirely on, let us say, a 21-year-old with a narrow degree subject, who the hon. Lady seems to suggest would be better qualified.

National Curriculum and Testing

Mr. Lidington: To ask the Secretary of State for Education what representations he has received about his review of the national curriculum and testing.

The Parliamentary Under-Secretary of State for Education (Mr. Robin Squire): Sir Ron Dearing, who is conducting the review, has held a series of regional conferences for head teachers and has consulted widely among teachers' organisations and other interested bodies. The Government expect his first report later this month, which will take into account all views expressed.

Mr. Lidington: Does my hon. Friend accept that many responsible and moderate members of the teaching profession, while welcoming the principle of the national curriculum and testing, have expressed legitimate concern about the bureaucracy associated with their implementation? Will he assure the House that not only Sir Ron Dearing but Ministers will listen to constructive criticism and comments from the profession, with a view to improving that state of affairs?

Mr. Squire: I hope that hon. Members of all parties will endorse the wise words of my hon. Friend. Sir Ron Dearing is setting out to tackle the major criticisms that have been expressed by teachers and their unions. I am confident that he will produce a report around which the majority of our teachers can unite to restore order and proper teaching in our schools.

Mr. Hardy: The Minister's noble Friend Baroness Blatch wrote to me the other day in reply to a letter from an able and respected headmaster in my constituency who had submitted a detailed assessment of the Government's

approach to testing. The noble Lady said that "some" of my constituent's comments were unfounded. Would the Minister ask his noble Friend to publish her comments about those criticisms that she accepted?

Mr. Squire: The House will recognise that I have a small problem in trying to answer a question that refers to a letter which I have not seen. The Government will publish their response to the Dearing review as soon as possible after that review, and I would expect that that response will cover the type of issue to which the hon. Gentleman refers.

Mr. Pawsey: Does my hon. Friend accept that the overwhelming majority of the nation's parents believe that the national curriculum and testing are essential for good education? Does he further accept that the majority of Conservative Members welcome the setting up of the Dearing review, look forward to its findings, and hope that those findings will be accepted by the teaching profession and implemented without any further problems?

Mr. Squire: I am grateful for my hon. Friend's comments, and I echo them. Testing and the national curriculum have raised standards in schools—[Laughter.] I hear laughter from Opposition Members. That is strange and sad. Testing and the national curriculum have raised standards, and the majority of teachers share the Government's wish that standards continue to be improved.

EC Students

Mr. Trimble: To ask the Secretary of State for Education whether he will make a statement on arrangements for EC students pursuing third level courses in the United Kingdom.

Mr. Boswell: United Kingdolm higher education institutions have a strong tradition of internationalism and openness. Their popularity with students from other countries is a welcome indicator of the quality of the education they offer. EC action programmes have provided an added impetus. We fully meet our EC obligations to provide equal rights of access to higher education. Eligible students from other member states studying here may receive an award to cover the cost of their course fees to a specified maximum. Reciprocal rights apply to United Kingdom students studying elsewhere in the EC.

Mr. Trimble: Have the number of students involved, and the expense, increased substantially in the past few years? I understand that the cost of the awards that the Minister mentioned was over £41 million last year, and the cost to the education system may have been somewhat higher. Does the Minister agree that the burden does not fall equally throughout the country but on certain regions? Will steps be taken to compensate those regions for the burden that they have to bear, and will he make other provisions for students from those regions who consequently find it more difficult to get a place?

Mr. Boswell: There is undoubtedly a cost in grants of the order the hon. Gentleman suggests, although it is a gross cost. Against that must be set the large income


received from overseas countries as a result of overseas students coming here. That amount has been estimated at £1·5 billion.
The regional implications depend on the admissions policies of the institutions in question and on the policies of the various funding councils and their equivalent in Northern Ireland. I will draw the hon. Gentleman's remarks to their attention.

Further Education Funding

Mr. Tyler: To ask the Secretary of State for Education if he will review the distinction between local education authority budgets and further education funding; and if he will make a statement.

Mr. Boswell: The Government will keep under review the spending needs of local education authorities and of the Further Education Funding Council in the light of their respective statutory responsibilities.

Mr. Tyler: Does the Minister accept that, since 1979, funding per student has been reduced by 22 per cent., according to Library figures? In those circumstances, does he accept that community colleges that are caught between the two stools of further education funding and local authorities' restricted budgets face a budgetary crisis?

Mr. Boswell: I should prefer to study the hon. Gentleman's figures at leisure—and I will do so. I am surprised that he did not acknowledge the huge expansion that we are carrying out in further education, to increase the number of students participating by 25 per cent. over the next three years, and to provide in the coming year £750 per full-time student place in further education.
The hon. Gentleman's point about the interface between further education and local authority provision is made from time to time. This is the first year and, broadly speaking, it has gone well. There have been one or two problems, but I can assure the hon. Gentleman that there is no black hole of funding and no reduction in the responsibilities of the parties involved.

Mr. Anthony Coombs: Given the huge planned increase in the numbers in further education during the next few years, is my hon. Friend aware of the great welcome that the principals of further education colleges have given to their greater freedom, from April of this year, to manage their own affairs? Will he ensure that the Educational Assets Board gives further education insitutions enough control over their assets, especially when there are disputes between further education colleges and district councils—there was such a case in Kidderminster in my constituency—to ensure that they can fulfil their responsibilities?

Mr. Boswell: My hon. Friend is right: there has been a positive response in general to the changes that we have made in the structure of the further education sector and to the indpendence that we have given to the various corporations. My hon. Friend will not expect me to comment on cases involving the Educational Assets Board, which is responsible for dividing assets, but I will draw his remarks to its attention.

Discretionary Student Grants

Mr. Hain: To ask the Secretary of State for Education if he has any plans to alter arrangements for the award of discretionary student grants.

Mr. Boswell: My right hon. Friend keeps the administration of student awards under periodic review. Any plans for changes in this field would be announced at the appropriate time.

Mr. Hain: Will the Minister agree to ring-fence funding for discretionary student awards? I and other hon. Members know of many students who cannot study medicine, law, music or other courses that they want to follow. It is crazy for society to deny them the opportunity to acquire those extra skills. I warn the Minister "Don't dare blame local education authorities, after the Government have savaged their budgets in recent year."

Mr. Boswell: I cannot accept what the hon. Gentleman says for a moment—but, then, I usually cannot. The fact is that we continue to fund local education authorities for their responsibilities to schools and to all other aspects of education. We will continue so to do.
At the moment, we are looking at a pattern of anecdote, rumour and innuendo about the withdrawal of certain services. For the short term, there is no point in giving local authorities discretion and then trying to take it away from them by fettering that discretion. In the slightly more medium term, and in view of the concern that has been expressed, we have joined with the Gulbenkian and Sir John Cass Foundations, asking them independently and throughly to review the current state of provision. If they have any messages for us, we will consider them carefully and quickly.

Mrs. Peacock: Is my hon. Friend aware that some Labour authorities, such as Kirklees, are refusing to give discretionary grants, so young students who have taken law degrees cannot then go on to law school or to the Council for Legal Education? They have degrees, but they cannot practise. What action can he take to help resolve that?

Mr. Boswell: The nature of discretionary grants is such that LEAs must use their discretion when choosing whether to award them. We continue to fund them—[Interruption.]—whatever the Opposition may bray. If they want the figures, I can give them to them. If a local authority decides that it is not going to give any awards at all, that would be tantamount to a withdrawal of discretion, and would indeed be a serious matter. If my hon. Friend has evidence to that effect, I shall be pleased to consider it.

Mr. Tony Lloyd: Is not it staggering that the Minister claims that he has the figures, yet he accuses my hon. Friend the Member for Neath (Mr. Hain) of anecdotes, rumour and innuendo, while his colleagues tell him that discretionary awards have, in effect, been abolished by local authorities? We are talking not simply about Labour authorities but about authorities up and down the country, and the Minister should know that that is the case. He should not come to the House and claim ignorance.
Let me ask the Minister a specific question. What will he do about those authorities? They tell me that cuts in Government money mean that they have to cut


discretionary grants. No discretionary grants means no opportunity. The responsibility lies with the Minister. What will he do about it?

Mr. Boswell: The hon. Gentleman can start by being a bit less arrogant about the Gulbenkian report unless or until he has seen it. What on earth is the point of commissioning the report or paying part of its costs if we are not prepared to consider what it says and take a view in the light of its findings? The hon. Gentleman said that authorities are cutting back. I happen to know—this reflects the change of political control, although the decision was taken before—that my local authority has expanded its provision in discretionary awards. That is an anecdote.
As the hon. Gentleman would like to have the figures, I can tell him that we have increased total expenditure to local authorities by 2·6 per cent. this year for education. That is above the increase in pupil numbers. Taking into account the level of pay settlements, which is required under current policy, that should be sufficient to continue to fund discretionary awards. If local authorities choose not to do that, it is their choice. It is not a decision which we have either imposed on them or encouraged them to take.

Examinations

Mr. French: To ask the Secretary of State for Education what research has been undertaken by his Department into the relationship between examinations and scholarly attainment.

Mr. Robin Squire: None, but I share the widespread view that performance in examinations provides both a measure of current achievement and an indicator of future potential.

Mr. French: Does my hon. Friend find it surprising that the loudest complaints about exams often come from those people who do not have to take them but who profess their interest in educational standards? Does he accept that examinations are not only a measurement, as he just indicated, but provide a useful spur to performance at all ages and are an essential component of any good education system?

Mr. Squire: I am grateful to my hon. Friend for his contribution. It is a little strange that all the evidence that we have shows that, far from complaining, school children have enjoyed taking the standard assessment tasks and that school attendance has risen on the days when tests are set. My hon. Friend is right to draw attention to the spur that tests and examinations provide. They give children a sense of purpose and achievement, which undoubtedly helps to raise standards in our schools.

Mr. Bryan Davies: The Minister has access to voluminous research that establishes that A-levels are a terrible predictor of subsequent degree performance. Why are they used to ration entry to higher education?

Mr. Squire: A study by Smithers and Robinson in 1989 showed a correlation between success in A-levels and degree performance. I am pleased that it also showed that mature students who lack A-level qualifications can perform as well as A-level entrants.

Mr. Harry Greenway: Does my hon. Friend agree that the conduct and marking of SATs should now be passed to examination boards, which perform professionally in that area? That would take the SATs away from being a burden on teachers to mark and take the setting of those important tests away from the bureaucracy which has been dealing with them so far.

Mr. Squire: I have listened carefully to my hon. Friend's suggestion. He will know that Sir Ron Dearing is addressing that issue within his overall review. It would be wrong for me to anticipate that. I look forward, as I am sure my hon. Friend does, to seeing Sir Ron's comments on that aspect.

Mrs. Ann Taylor: Can the Minister tell the House who in the Government will be responsible for this year's response to the GCSE examination results? Does the Minister recall last year's fiasco when the junior Minister praised the GCSE results and, a few days later, the Secretary of State rubbished them and the efforts of those who had taken the exams? Will the Minister assure the House that Ministers will not undermine the achievement of those who have taken GCSEs this year and that credit will be given where it is due—to the teachers and children who have worked so hard? Will he guarantee that Ministers will not rubbish those results this year?

Mr. Squire: I am advised by my hon. Friend the Parliamentary Under-Secretary of State for Schools that the hon. Lady has entirely misunderstood what he said. Of course we welcome the improvement in GCSE results which has been seen recently. We look forward very much to those upward trends continuing and we will, of course, expect teachers to have carried out their responsibilities in that respect. I look forward to the hon. Lady joining the Government in seeing ever-higher standards achieved in those examinations as well.

Sir Anthony Grant: If such research is carried out, will my hon. Friend look into a complaint that I have received from certain dons in Cambridge—that the award of first-class degrees is made far too easily these days? They tell me that many of the people at other universities who receive firsts are the sort of people who would not have obtained their matriculation in the old days.

Mr. Squire: Despite the fairly wide-ranging responsibilities that I carry, I must tell my hon. Friend that I do not carry that responsibility. However, my hon. Friend the Parliamentary Under-Secretary of State for Further and Higher Education has heard my hon. Friend's interesting comments and I have a strange feeling that he will reflect on them in the immediate future.

English and Technical Studies Testing

Ms Gordon: To ask the Secretary of State for Education what has been the cost of external examiners for the current year's English and technical studies tests.

Mr. Robin Squire: External marking is not a requirement for the 1993 tests in English, technology or other subjects. My right hon. Friend has asked Sir Ron Dearing to consider the merits of this option for the tests for 11 and 14-year-olds in 1994 and subsequently.

Ms Gordon: My question was what has been the cost of the external examiners for this year's tests. Is the Minister


aware that I have received letters from head teachers in Tower Hamlets saying that they did not have the equipment in place to cover the areas required for testing in technological studies and that they received the details so late that their money had already been committed for the financial year? Instead of wasting money on publicity campaigns and external examiners to force English tests down the throats of unwilling teachers, would not it have been better to spend that money providing the tools for teaching our children? Will the Minister and the Secretary of State now admit that they were wrong about the tests and stop attacking the teachers? Education Ministers come and go, but it is the teachers who are the mainstay of our education system.

Mr. Squire: The hon. Lady has justified her reputation as being part of the jurassic tendency in educational terms. In taking but one element of the hon. Lady's comments, the adult literacy and basic skills unit recently reported that one third of students entering further education colleges did not have an adequate command of English to take advantage of their courses. I hope that the hon. Lady will join me in regretting and deploring that fact and in looking forward to supporting the tests which will enable us to improve the standards of pupils of all ages.

Mr. Fabricant: Does my hon. Friend agree that external examination has shown itself to be an excellent way of ensuring that British universities maintain objective testing and standards throughout Europe? Does not he think it quite extraordinary that the Labour party consistently opposes everything that will improve testing, objectivity and a raising of standards in secondary schools?

Mr. Squire: I can only say to my hon. Friend, who is of course absolutely right, that I am not surprised. Time and again, when faced with a choice, the Labour party sides not with the consumer—in this case, the parents or pupils—but always with the producers. In this particular case, the Labour party is on a losing wicket and it will come to see that that is not helping to improve standards in our schools.

Standard Spending Assessment (Merseyside)

Mr. John Evans: To ask the Secretary of State for Education what has been the standard spending assessment for education for each of the Merseyside metropolitan authorities for each of the last two years.

Mr. Forth: The figures for 1992–93 were as follows: Knowsley, £79 million; Liverpool, £215 million; St. Helens, £73 million; Sefton, £110 million; and Wirral, £136 million. For 1993–94 the figures will be: Knowsley, £71 million; Liverpool, £199 million; St. Helens, £62 million; Sefton, £96 million; and Wirral, £122 million.

Mr. Evans: I thank the Minister for that reply. Does he acknowledge that the figures he has just given show that school children in St. Helens get a very raw deal from the Government's SSAs? Will he explain to the parents of St. Helens—preferably in plain and simple English—why Liverpool and Knowsley are allocated £500,000 more to run a 1,000 pupil secondary school than the neighbouring borough of St. Helens?

Mr. Forth: Yes. Education SSAs are based mainly on pupil numbers. Recently, pupil numbers in St. Helens have

been falling. That is one of the reasons. The other is that St. Helens comes out rather badly from the additional educational needs—AEN—index, which is part of the educational SSA mechanism. The good news for the hon. Gentleman and his constituents is that we are conducting a wide-ranging review of the methodology and mechanisms of SSAs and the AEN index. We will seek to update them and make them more relevant, fairer and more reflective of needs than in the past. I cannot predict what the outcome will be for St. Helens, or any other authority, but the hon. Gentleman and his constituents can be sure that, at the end of that process, all will be seen to be fair and even-handed.

Trainee Teachers

Mr. Mans: To ask the Secretary of State for Education what plans he has to give trainee teachers more time in the classroom learning practical skills.

Mr. Forth: The tougher standards that my right hon. Friend the Secretary of State announced last year for the training of secondary teachers will ensure that postgraduate students spend two thirds of their time in schools. Our recent proposals for reform of primary teacher training also involve a significant increase in the time to be spent in schools.

Mr. Mans: Does my hon. Friend agree that good teacher training should be a balance between education theory and practical skills? Does he further agree that, in the past, too much attention has been paid to education theory and that, in the future, more attention should be paid to practical skills, which are best learnt in the classroom?

Mr. Forth: My hon. Friend has put succinctly the philosophy underlying the proposals that my right hon. Friend made recently. Although they are out to consultation at the moment, I believe that, on mature reflection, most people will agree with my hon. Friend that the balance between academic training and classroom experience has probably not been correct in the past. That is something which we will seek to correct. I hope that all hon. Members and people outside the House who are interested will take the opportunity to reply during the consultations that we have recently initiated on this important subject.

Mr. Win Griffiths: In accepting that there must be a correct balance between the theory of learning processes and the actual practice of teaching, does the Minister agree that his Department's idea for a one-year course for adults who will teach children at the most critical stage of the learning process is totally inadequate? If the majority view of the consultation that he is undertaking is that one year is not enough, will he accept that professional opinion?

Mr. Forth: Of course we will look carefully, as ever, at the responses to the consultation paper. The reality is that, at the moment, many graduates enter teaching, following a one-year degree postgraduate certificate of education course, with a degree that may have no relevance to the primary curriculum. It is odd that the hon. Gentleman has leapt to that conclusion without properly considering the strength of the suggestions made by my right hon. Friend in the consultation paper. When the hysteria shown by Opposition Members has settled down, it will be shown,


on reflection and consideration, that our proposals are sensible and practical and in the interests of teaching and education.

Standard Spending Assessments

Mr. Gill: To ask the Secretary of State for Education whether he will give consideration to increasing the sparsity factor in future calculations of standard spending assessments.

Mr. Forth: The education elements of SSAs are currently under review. The review will extend to the sparsity allowance, but, at this stage, it is too soon to say what the outcome will be.

Mr. Gill: Will my hon. Friend acknowledge the importance of giving sufficient weight to the sparsity factor, adequately to reflect the fact that the economies of scale available in urban areas are simply not available to sparsely populated rural areas?

Mr. Forth: We have long recognised the sparsity allowance's relevance. My hon. Friend has been assiduous in ensuring that his county's interests have been fully represented in our consideration of that factor. As I said earlier, we are looking comprehensively at SSAs and the additional educational needs factors, including the sparsity allowance, to satisfy ourselves, education authorities, parents and pupils throughout the country that we fairly reflect the needs and balances of schools and authorities in the mechanisms for paying moneys and providing resources to them. Everybody in this Chamber will be happy with the result of our consideration, which we hope will be finalised and available in the autumn.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. David Evans: To ask the Prime Minister if he will list his official engagements for Tuesday 13 July.

The Prime Minister (Mr. John Major): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Evans: Is my right hon. Friend aware that Conservative Members are delighted to welcome him back from Tokyo and congratulate him on his success? Is not that in stark contrast to the lot opposite, who are horrified that their leader has just come back from Bournemouth? Did my right hon. Friend's father, at the height of his career as a trapeze artist, do as many somersaults as the Leader of the Opposition, the wriggler from Monklands, East?

The Prime Minister: I am grateful to my hon. Friend for his welcome home. We did have a successful meeting in Tokyo and, from what I hear, the right hon. and learned Member for Monklands, East (Mr. Smith) had a rather less successful meeting in Bournemouth.

Mr. John Smith: Following the vote in the House last night in which the Prime Minister and his colleagues voted to impose value added tax on the heating bills of millions

of pensioners and families, does not he think that he should now apologise to the British people for betraying the election pledges that he made during the last election?

The Prime Minister: I am surprised that the right hon. and learned Gentleman should raise that matter today. This week's edition of "Labour Party News" contains an article with the heading
Sending your comments to Chris Smith MP".
It asks:
In what ways can economic policy be developed to encourage environmental protection?
You might consider: Taxation Policy (eg energy tax 2026;)".

Mr. Smith: The Prime Minister clearly does not want to hear a reference to his VAT commitment. Let me remind him what he said in the "Conservative Campaign Guide"—[Interruption.] I know that Conservative Members do not want to hear it. The last thing that they want to hear about is the "Conservative Campaign Guide". It attacked the Labour party for what it called irresponsible scares about VAT and said:
The Prime Minister has confirmed that the Government has no intention of raising VAT.
Why was that said in the election?

The Prime Minister: The right hon. and learned Gentleman clearly does not know his own policy and I offer him my copy of "Labour Party News". My comment was in response to Labour's charges that we intended to raise the standard rate to 22 per cent., which we were not intending.

Mr. Battle: You lied to them.

Madam Speaker: Order. I clearly heard the hon. Gentleman's unparliamentary language. Will he now withdraw it?

Mr. Battle: I understand that the expression is "economical with the truth", Madam Speaker.

The Prime Minister: That was a typically cheap withdrawal. Frankly, the Leader of the Opposition is not being remotely open about his position. Quite apart from this week's admission that the Labour party was considering VAT on fuel—and still is—in its policy review document, "Looking to the Future", the Labour party stated:
Zero-rating should remain on fares, books, food and children's clothing.
It specifically excluded fuel. That fact, allied to the document from which I quoted earlier, constitutes the clearest illustration that that is Labour party policy.
Before the Liberal leader looks too smug, may I say that in his document "Costing the Earth" the Liberal Democrats advocated a tax on energy and, failing that, said:
We would … press forward … by ending the anomalous zero rate of VAT on fuel.
Perhaps the right hon. Gentleman will go back to Christchurch and tell them that.

Mr. John Smith: If the Prime Minister wants to wriggle out of the "Conservative Campaign Guide" commitment, let me remind him of what he said to the House on 28 January 1992. He said:
There will he no VAT increase."—[Official Report, 28 January 1992; Vol. 202, c. 808]


Did the Prime Minister say that? Does he deny that he said it? Does he also deny that he has cynically betrayed an election pledge?

The Prime Minister: The right hon. and learned Gentleman is embarrassed because he walked into an open hole. That quote of mine is clearly related to the 17 per cent. rate of VAT, which we have not changed. The right hon. and learned Gentleman is well aware of that. He may wriggle and wriggle, but this week's edition of "Labour Party News' shows clearly what the Labour party policy was and is.

Mr. Harry Greenway: To ask the Prime Minister if he will list his official engagements for Tuesday 13 July.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Greenway: Does my right hon. Friend agree that racial tolerance and compassion underlie the British character and that that is reflected in the natural desire of many childless couples to want to offer a good and loving home to children, regardless of race, colour or creed? Is not it time to end the shameful political correctness of some officials who seek to discourage that?

The Prime Minister: The Government's adoption policy will be guided by common sense and the interests of the child. There will be no house room for political correctness.

Mr. Wigley: Is the Prime Minister aware of the strong feeling in Wales about the need to give the Welsh language official status alongside the English language in Wales—a policy which is supported across party political boundaries? Is he aware that a monolingual French label on a wine bottle or similar product in Wales is official in Wales? A label in Greek only is valid in Wales, but a label in the Welsh language is not valid because the British Government do not recognise the Welsh language as an official language. Will the right hon. Gentleman try to change that policy at the Report stage of the Welsh Language Bill this week?

The Prime Minister: The Government's Welsh Language Bill represents an important addition to support and encouragement for the Welsh language in Wales. I know that the hon. Gentleman has canvassed and fought hard for the Bill and I know that he appreciated the fact that it was produced. We believe that Welsh already enjoys official status in Wales. A general declaration in the Bill would have no practical effect and would probably only increase legal uncertainty.

Mr. Milligan: Does my right hon. Friend agree that the reason that there is one member, one vote in the trade union movement was that the Government gave financial encouragement for postal ballots and actively helped democracy in the trade unions? Given that the campaign of the Leader of the Opposition to introduce one member, one vote in the Labour party will clearly either be fudged or abandoned, what measures will the Government—[Interruption.]

Madam Speaker: Order. The hon. Gentleman must resume his seat for a moment. The Prime Minister is not responsible for Opposition policies. The hon. Gentleman must rephrase his question.

Mr. Milligan: I am grateful for your correction. I am asking what action the Government will take, similar to that taken to encourage democracy in the trade unions, to encourage democracy in the Labour party.

The Prime Minister: Democracy in the Labour party would be a welcome addition to our public life. The right hon. and learned Member for Monklands, East (Mr. Smith) appears to be prepared to fight the battle for one man, one vote. He also appears to be retreating from it.

Mrs. Roche: To ask the Prime Minister if he will list his official engagements for Tuesday 13 July.

The Prime Minister: I refer the hon. Lady to the reply I gave some moments ago.

Mrs. Roche: Will the Prime Minister break his reputation for stubbornness and listen to the Social Security Advisory Committee when it says that the imposition of VAT on domestic fuel will have a disproportionate effect on the incomes of the poor?

The Prime Minister: As the hon. Lady will know—we have stated it often enough in the House—we have made it clear that extra help will be provided in advance for people who are vulnerable, to meet the costs of VAT on fuel. That help will be in addition to the automatic increase in pensions and other benefits to reflect the impact of any increase in the retail prices index. I have made that clear repeatedly and so has my right hon. Friend the Secretary of State for Social Security. Perhaps the hon. Lady would either care to listen to that statement now or read the innumerable occasions on which it has been made clear.

Mr. Day: Will my right hon. Friend join me in congratulating British manufacturing industry on the figures published today on manufacturing output? Does he agree that that is a sign that Britain is moving into recovery and that, under his strong leadership, not only will Britain's economy improve but our party will emerge victorious at the end of this Parliament?

The Prime Minister: They were extremely good figures this morning. The increase in manufacturing output reported this morning is the largest monthly increase for four years. Clearly, that is good news and it bodes well for British manufacturing. But it is only one of a large number of signs that the economy is recovering—retail sales are up, car registrations are up, confidence is up and unemployment is down.

Rev. Martin Smyth: To ask the Prime Minister if he will list his official engagements for Tuesday 13 July.

The Prime Minister: I refer the hon. Gentleman to the reply I gave some moments ago.

Rev. Martin Smyth: Has the Prime Minister seen today's leader article in The Times which refers to the instability in Northern Ireland since the signing of the Anglo-Irish Agreement and the unease among Unionists? Does he accept that that instability has been increased by the Labour party's so-called discussion document, Dick Spring's revelations and the talks between emissaries of the British Government and the Provisional IRA? Will we now move from parrot calls for round table talks to restoring accountable democracy in Northern Ireland at all levels by direct action, rather than diplomatic dithering?

The Prime Minister: On the first part of the hon. Gentleman's question, I share the views that he expressed about the Labour party's proposals for Northern Ireland. My right hon. and learned Friend the Secretary of State for Northern Ireland wrote to the Leader of the Opposition about this matter some time ago, but, so far as I am aware, he has not yet received a reply.
As for talks in the future, I hope that we shall be able to reach the outcome that the hon. Gentleman has in mind as a result of the resumption of talks. We hope that they will be able to resume speadily and, once they resume, we hope that they will be successful.

Bromsgrove

Mr. Thomason: To ask the Prime Minister if he will visit Bromsgrove.

The Prime Minister: I have no immediate plans to do so.

Mr. Thomason: Will my right hon. Friend join me in congratulating Rover cars, parts of which are made in the Bromsgrove constituency, which announced yesterday that it had increased sales world wide? Does he agree that

its achievement bodes well and is a good advertisement for British quality, British workers and an expanding British economy?

The Prime Minister: I am happy to join my hon. Friend in congratulating Rover, which has increased its sales in Europe significantly. To have done that in the difficult trading conditions of Europe speaks volumes for its pricing and the quality of its products. Total car production has risen by about 11 per cent. and production of computers and related equipment is up by 8 per cent. There is no doubt that British industry is becoming more competitive and that British manufacturing industry in particular is beginning to penetrate new markets in quite a substantial way.

Dr. Lynne Jones: What would the Prime Minister say to the residents of Bromsgrove and nearby Birmingham who are sceptical about his claim that the imposition of VAT on fuel is an energy tax when that tax is also to be imposed on standing charges and there is no proposal to reinvest the revenue gained in energy conservation measures?

The Prime Minister: I would say what I said moments ago to the hon. Member for Hornsey and Wood Green (Mrs. Roche) about the reimbursement that would be available.

Points of Order

Mr. Brian Wilson: On a point of order, Madam Speaker. Have you received a request for a statement to be made today about the funding of the west coast main line, a subject of enormous importance to many hon. Members?
Through the device of a written reply, a statement has been put out by the Government which fundamentally changes the nature of funding for major infrastructure projects in this country. It seems that the Government are no longer to have direct responsibility for such projects and that they are to become a sideline for Hambros bank. Such information should not be given in a written reply but should be the subject of a statement made to the House.

Madam Speaker: I have not been told that any Minister wishes to make a statement today.

Mr. Alex Salmond: On a point of order, Madam Speaker. As you will be aware, the foundation treaty of this Parliament is the Act of Union 1707. That Act contains a number of provisions, including article 21, which protects the rights and privileges of Scottish local government.
While it is true that local government in Scotland has changed a number of times since 1707, such change has always come about by way of consensus or royal commission. Indeed, on the last occasion, in 1972–73, there was no division on either Second Reading or Third Reading of the relevant measure and the vast majority of Scottish hon. Members supported the generality of the proposals. It is unprecedented for Scottish local government to be gerrymandered, using the backing of English votes in the House of Commons.
My point of order for you, Madam Speaker—perhaps you will wish to take time to consider it—is whether the process on which, it seems, we are about to engage is consistent with the Act of Union. It is true that some of us have less confidence than have others in that Act, but only last year the Prime Minister considered the matter important enough to describe it as an issue which transcended the general election campaign.
Perhaps you will consider the matter, Madam Speaker, and give your opinion before tomorrow, when we embark on what I suspect will be the first of many debates and votes in the House on the issue of Scottish local government and the attempt of the Secretary of State for Scotland to gerrymander it for his own purposes.

Madam Speaker: I have listened carefully to the hon. Member's remarks on what seems to be a complex matter. I shall give a considered response in the most appropriate way in due course.

Mr. Ray Powell: On a point of order, Madam Speaker; I seek your help. Perhaps you will disclose whether the Home Secretary has asked for permission to make a statement about Sunday trading.
I appreciate from information that I have received that a paper will be published today and that it will be available to hon. Members at 3.30. As the subject is so emotive, and in view of the fact that we have debated it in the House continually since 1986—I took a long time preparing a private Member's Bill which was debated this year—I

should have thought that the Home Secretary, in view of all the promises that were made by his predecessors, would at least have afforded the House an opportunity to debate the subject by way of questions following a statement before issuing four options, the details of which he has never disclosed to the House in any way, shape or form in the past 12 months.

Madam Speaker: Order. I remind the hon. Member and the House that it is not for me to allow Ministers to make statements. Ministers tell me when they wish to make statements, and no Minister has told me of his or her desire to make a statement today.

Mr. Tam Dalyell: On a point of order, Madam Speaker. Before the time of Mr. Speaker Weatherill—certainly in the days of Sir Harry Hylton-Foster, and probably before that—your predecessors were doubtless irritated by requests under what was then Standing Order No. 9. However irritated they became, however, they did not refuse to hear applications relating to serious subjects.
I do not wish to be impertinent, Madam Speaker, but some of the most experienced of us were wondering on what authority in "Erskine May" a Speaker can refuse to hear an application under what is now Standing Order No. 20. I think that it is probably a habit introduced by Mr. Speaker Weatherill.
It can hardly be denied that what Mr. Rolf Ekens is doing in Baghdad is a matter of importance; it is certainly urgent; and it is now definite. It would be indelicate to challenge the ruling preventing my colleagues and me from being heard, but we wonder what the precedent is.

Madam Speaker: The matter in question must be urgent, and it must relate to new developments, such as a change of policy. I do not wish to discuss applications made to me in the House; the hon. Gentleman is a long-standing Member of Parliament, and he knows that we do not do that.
The hon. Gentleman has submitted a Standing Order No. 20 application relating to the United Nations representative in Baghdad. The United Nations representative has not even reached Baghdad yet, and I therefore cannot consider an application under Standing Order No. 20.

Mr. Bob Cryer: Further to the point of order put my hon. Friend the Member for Ogmore (Mr. Powell), Madam Speaker. I wish to raise the embargo on White Papers that operates in the House until 3.30 pm. This morning, the Home Office briefed the press about the contents of a White Paper, setting out the options. It strikes me as extremely unfair that elected Members of Parliament should be denied information until 3.30 pm, while the press can obtain it in the morning. Surely, if there is to be an embargo, it should apply to everyone, but especially to the press. The information should be released to Members of Parliament at the same time as it is released to the press, at the very least. The Home Office should not give the press a privileged position to the disadvantage of Members of Parliament.
You represent the interests of the House, Madam Speaker. Will you make hon. Members' feelings clear to the Home Office and the Home Secretary, and support those feelings yourself?

Madam Speaker: As the hon. Gentleman knows, it is not for the Speaker but for the appropriate Minister to determine when official papers should be made available. As the House is aware, I deprecate the making of statements to the press outside the House, and I shall continue to make my views known.

Mr. David Winnick: On a point of order, Madam Speaker. I know that you have the interests of Back Benchers at heart. I hope that you will not mind my raising the matter mentioned earlier by my hon. Friend the Member for Linlithgow (Mr. Dalyell). You have said that, for an application under Standing Order No. 20 to be granted, the issue involved must be urgent; but is there not a distinction to be drawn between an application that is made and one that is granted?

Madam Speaker: Order. I am sorry to interrupt the hon. Gentleman, but I understand that he has written me a long letter about the matter, which I have not had an opportunity to read. I hope that he will do me the courtesy of allowing me to read it so that I can respond appropriately.

Mr. Dennis Skinner: On a point of order, Madam Speaker. Evidence will show that, before 1989, applications under Standing Order No. 9—now Standing Order No. 20—were fairly frequent. Everyone knows what happened then : as a result of the televising of our proceedings, the powers-that-be got together and decided that applications under Standing Order No. 20 should take place in television prime time. Pressures were brought to bear, and as a result Mr. Speaker Weatherill changed the system.
Today and yesterday, my hon. Friend the Member for Linlithgow (Mr. Dalyell) wanted to raise a matter of prime importance. Five years ago, his application would undoubtedly have been granted. Anyone who has been around here long enough to know is aware that television changed the system. Hon. Members should understand why their applications are now being denied.

Mr. Andrew Faulds: On a point of order, Madam Speaker.

Madam Speaker: Is it a similar point of order?

Mr. Faulds: Absolutely. Some of us who have been here even longer remember that in the old days there was absolutely no way in which a Standing Order No. 9—now a Standing Order No. 20—having been refused, could even have been raised within the House. I suggest, Madam Speaker, that you go back to the old practice.

Madam Speaker: I tend to be rather old-fashioned, and I would like to do that. I look at Standing Order No. 20 applications on their merits. I cannot allow the proceedings of the House to be changed because a Member makes to me a Standing Order No. 20 application which is not particularly important, on which there is no new development, and which is not urgent. I look at Standing Order No. 20 applications in those three lights, and I will continue to deal with them in that way.

Statutory Instruments, &c.

Madam Speaker: With permission, I shall put together the motions relating to statutory instruments.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &c.).

SEA FISHERIES

That the Third Country Fishing (Enforcement) Order 1993 (S.I., 1993, No. 1197) be referred to a Standing Committee on Statutory Instruments, &c.

DISEASES OF ANIMALS

That the Diseases of Animals (Therapeutic Substances) (Revocation) Order 1993 (S.I., 1993, No. 1331) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Kirkhope.]

Question agreed to.

Pensioners' Equality

Mr. Jeremy Corbyn: I beg to move,
That leave be given to bring in a Bill to harmonise the retirement age at 60 for both women and men; to provide for the state retirement pension to be linked to average earnings and to be universally available; and for connected purposes.
It is my pleasure to seek leave to bring in the Pensioners' Equality Bill, which is a very short and simple Bill. It is very timely because there is a great debate raging about the future of the state old-age pension and, indeed, of the welfare state itself. My concern is that this debate is increasingly being conducted on late night television shows and in the pages of the newspaper broadsheets between experts of varying degree, all of whom fundamentally agree that there should be a reduction in the level of state expenditure on the old-age pension and an increase in private provision.
My Bill moves in exactly the opposite direction. It is not about privatisation or reduction; it is fundamentally about decency in a civilised society. To my mind, that means looking at the very serious degree of poverty in which many elderly people in this country have to live at the present time. There is something deeply humiliating about people who have spent a lifetime at work, in an office, in a factory, on a farm or at home having to wait around in a supermarket to get the cheap bread at five o'clock on a Saturday afternoon, or to queue at the greengrocers for the mouldy vegetables that are sold off at the end of the working day. There is something fundamentally immoral about that.
The Secretary of State for Social Security and the Chancellor of the Exchequer are both dealing with the problem of the £50 billion Government borrowing requirement. That borrowing requirement, I hasten to add, has been brought about by a Conservative Government since 1979. It has been brought about by the deindustrialisation of the economy, by the enormous tax handout of over £20 billion to those earning more than £40,000 a year, and, in my view, also by the horrendous level of arms expenditure, including expenditure on nuclear weapons.
These issues have to be faced, but we are expected, as a country, to face them by cutting the welfare benefits of the poorest in our society. My Bill deals exclusively with the problems of pensioners, but I am sure that other hon. Members will want to bring forward similar Bills in relation to child benefit and other universal benefits.
The Secretary of State for Social Security, in his Mais lecture in the City of London, waxed long and lyrical about the problem of the aging population and the growing burden on those at work of the elderly population. He does not seem to understand that the word "burden" and the way in which he describes the growing problem of the elderly cause fear among many pensioners in this country who are forced to try to live on the state pension, plus housing benefits and any other odd benefits that they may be able to get.
The fact that there is a demographic argument is surely something that we should be pleased about. It shows the success of the welfare state and, in particular, of the national health service in increasing the longevity of so many people.
The Government's policy is a culmination of their 1985 White Paper, introduced by the present chairman of the

Conservative party and piloted through the House by the current Prime Minister. The Bill which followed the White Paper reduced the value of the state earnings-related pension scheme and encouraged people to put money into private pension schemes. That has cost the national insurance fund £2 billion. In the Government's view, it has increased flexibility. Above all, however, it has compounded the breaking of the rise in the state old-age pension each year in line with earnings and put in its place a rise that is in line with the retail prices index, which has cost every pensioner at least £19 a week.
Those who believe that the solution to all the so-called problems that we face is to encourage private pension funds ought to look at the investigations carried out by the Select Committee on Social Security and the large-scale fraud that has hit a large number of pension funds. The Maxwell pension fund is the greatest of those frauds, but there are many others. I am concerned about the lack of democracy in running pension funds. I am also concerned about the promotion of private portable pension schemes. There is no democracy whatsoever when it comes to the running of such funds.
What is needed is an understanding that in a civilised society it is the duty of the state to provide a decent standard of living for those who have reached retirement age, which I believe should be reduced to 60. The Government claim that there has been a 34 per cent. rise in the real income levels of those over 65. They have calculated that figure by taking the income of all people over the age of 65, including the super-rich who made huge gains because of the way that the stock market performed, and adding it to occupational pension schemes. Therefore, the Government say that everyone over the age of 65 is better off.
The pensioners I meet at meetings of pensioners' organisations all over this country, as well as in Wales and Scotland, do not share that view. It also masks the fact that women tend not to be members of occupational pension schemes and that older women pensioners are by far the worst off, particularly those over the age of 75 who are living in real poverty.
Hypothermia is a totally preventable and avoidable condition, yet many pensioners die of it each winter. All the codes of practice that have been introduced to protect the elderly from cut-offs have been completely eliminated by the introduction of rechargeable meter keys by the electricity companies. There is now self-disconnection by many elderly people who cannot afford to get the key recharged so that the supply of electricity to their homes can continue.
In addition, cuts in health care and local authority services hit the elderly particularly hard. Two weeks ago there was an enormous rally in Central hall, Westminster, followed by an enormous lobby in this building. More than 5,000 supporters of the National Federation of Retirement Pensions Associations attended Central hall, Westminster, and heard inspirational speeches from Jack Jones and many others. Jack Jones was condemned by the Chancellor of the Exchequer as being politically motivated—I am not quite sure what the Chancellor of the Exchequer is. At that rally there was a demand for decency in retirement. There was also a call for parity with the European average for the state old-age pension and for an end to the indignities that so many people have to suffer in retirement.
It is a condemnation of the television and radio channels and of most newspapers that not one of them saw fit to report anything whatsoever to do with that very important rally and lobby by people who, at great expense, had travelled to London to take part in it.
My proposals would cost a great deal of money. I do not flinch from that. I do not deny it. I am not ashamed to say it. I am also not ashamed to say where I think that money should come from. It should come from restoring the levels of taxation on the very rich which have been done away with by the Government since 1979. It should also come from cutting European Community payments, fraudulently obtained, and from reductions in the enormous level of arms expenditure. My Bill would do a lot to make life a bit more bearable for many people.
Why is that this country and a number of other countries throughout Europe are discussing raising the age at which the state retirement pension should be paid to 67, and in some cases to 70? There is a conspiracy to do that all across Europe. The retired population of Europe and of this country do not want to take part in that conspiracy. We want the retirement age to be harmonised downwards to 60. It is often very unfair that one of a couple living together should have to retire five years earlier than the other. It can be quite a miserable existence for the first waiting for the second—the male partner—to retire at 65. It is only sensible and logical that we should lower the retirement age to 60 and, thereby, bring a great deal of happiness and not a little civilisation to society.
Restoration of the link with earnings, so brutally and crudely broken in 1980, would make every pensioner £19 per week better off. I consider that money to have been stolen from the pensioners.
Finally, I am concerned that, at the moment, the Government are putting forward ideas to target the old-age pension. The word "target" sends a frisson down my spine—a feeling shared by millions of people whose experience of targeting is the indignity of the means test and a reduction in the real standards of living of many

poor people. The state pension is a contributory benefit, paid for through taxation and national insurance contributions during a working life, and should be for all time and for ever—and guaranteed so to be—available universally. At the height of the 1970s, when a Labour Government were in office, the state pension was 25 per cent. of average male earnings for a couple. It is now considerably less—just over 15 per cent. That is an indictment of the way in which the Conservative Government have treated the elderly.

Question put and agreed to.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Who will prepare and bring in the Bill?

Mr. Corbyn: There were many who wanted to bring in the Bill, Mr. Deputy Speaker.
Bill ordered to be brought in by Mr. Jeremy Corbyn, Mr. Alan Simpson, Mr. Harry Cohen, Mr. Dennis Skinner, Mrs. Alice Mahon, Mr. Ken Livingstone, Mr. Bob Cryer, Ms Mildred Gordon, Mr. Malcolm Chisholm, Mr. Max Madden, Mr. Dennis Canavan and Mr. Bernie Grant.

PENSIONERS' EQUALITY

Mr. Jeremy Corbyn accordingly presented a Bill to harmonise the retirement age at 60 for both women and men; to provide for the state retirement pension to be linked to average earnings and to be universally available; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 23 July, and to be printed. [Bill 235]

Mr. David Winnick: On a point of order, Mr. Deputy Speaker. Despite the controversy created by Ministers and other hon. Members, no one has objected to the Bill. That being the case, cannot we now make progress with the Bill for the good reasons advanced by my hon. Friend?

Mr. Deputy Speaker: The hon. Gentleman knows very well that that is not a matter for the Chair.

Orders of the Day — Finance (No. 2) Bill

Not amended (in the Committee) and as amended (in the Standing Committee), further considered.

[MR. GEOFFREY LOFTHOUSE in the Chair]

Clause 204

STAMP DUTY

Mr. Nicholas Brown: I beg to move amendment No. 27, in page 158, leave out lines 18 to 41.
This clause brings forward by three months—from 5 August to 5 May—the date by which the Finance Bill must be enacted. It also extends from 25 days to 30 days the allowable period between the Budget statement and publication of the Finance Bill. It is not contentious to say that the purpose of the first change is to ensure—not in statute but at least in effect, given the changes being made—that the Finance Bill will almost certainly have had to complete its Committee stage before the Easter recess. The purpose of the second change is to ensure that the Government will never have to publish the Finance Bill until after the Christmas recess.
I should make it absolutely clear, for the avoidance of any doubt whatever, that the unified Budget process is a shared objective of the Government and the Opposition. The Armstrong committee recommended the process back in 1980, and the Treasury and Civil Service Select Committee made similar recommendations in 1982. Both Committees highlighted two principal arguments in favour of the unified budget. The first is that if tax decisions and spending decisions are made together, the relationship between the two is thrown into sharper focus.
I had the pleasure of hearing the Financial Secretary to the Treasury speak at a seminar organised by the Institute for Fiscal Studies. He said that decisions would be better informed. That may or may not be so, but I am absolutely certain that the Financial Secretary and the rest of the Treasury team do not intend to allow us to change any of those decisions under the new unified Budget process. Better informed or not, I suspect that it is the Government's intention that the decisions contained in the Finance Bill remain in the Bill as, indeed, they almost always do from Second Reading right up to Third Reading. However, we shall certainly be better informed.
The second point made by the Armstrong committee and the Treasury and Civil Service Select Committee way back in 1982 was that tax proposals are currently presented and considered in a way that makes revision and even expert consideration difficult. In our evidence to the Select Committee on Procedure we said that the unified Budget process is an important opportunity for reform and that there is a strong case for technical consideration of the Finance Bill, followed by political debate on broader issues of principle. As I understand it, those issues are currently being considered by the Procedure Committee.
As making the new procedure work is a shared objective, the Opposition are willing to co-operate in the usual way through the usual channels to move cautiously and with consent towards an improved way of dealing with such important issues. It is important that the House should get it right. As I have said many times, the Committee stage of the Finance Bill, with all its imperfections, is the only forum for detailed scrutiny of the Government's financial legislation. We have agreed in principle that we want to make the new unified Budget procedure work. Our method of doing that on issues of detail is to wait for the advice from the Procedure Committee as to how best to make progress. We believe that the whole House should have an opportunity to consider and debate the views of the Procedure Committee and then to reach a consensus around its recommendations.
The Government, however, are not responding reasonably to a wholly reasonable approach. I went to see the Financial Secretary in his very pleasant office, and I should have been warned when I went in because over the fireplace in his office hangs a large portrait of the hon. Member for Huntingdon—nothing so wimpish as the present right hon. Member for Huntingdon (Mr. Major), but a portrait of the famous hon. Member for Huntingdon, Oliver Cromwell. Cromwell did not muck about with a Committee stage of the Finance Bill: when the House refused to take the public spending decisions that he wanted—relating to defence expenditure, I believe—he shouted, "Colonel Harrison, fetch them in", and the dragoons marched in and brought the parliamentary Opposition debate to a close.
The Financial Secretary has clearly been inspired by that portrait and the strong leadership that it represents. I understand the Conservative party's current desire for strong leadership, and I understand how the Financial Secretary could be seduced into behaving in an authoritarian way, although it is not characteristic.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell): Is the hon. Gentleman espousing the cause of the Rump Parliament as a representative body capable of analysing the details of a Finance Bill?

Mr. Brown: I remind the Financial Secretary that the mid-17th century episode ended in tears for many of the principal characters. I think that the appropriate analogy for him is the fate of Sir Thomas Wentworth, who tried to impose his master's wishes on a truculent House and came to a very sticky end, disappointed that in his final hours he did not have even the support of the master whom he sought to serve—an awful warning for others who seek to behave like him. His nickname was Black Tom Tyrant. I should hate to think of the Financial Secretary going down in history as Black Stephen Tyrant—it does not even have a ring to it. However, he is behaving heavy-handedly by insisting that we pre-empt the decisions of the Procedure Committee and legislate now for matters that should more properly be discussed, in the normal way, when we have the views of that Committee in front of us.
4 pm
I understand that the Financial Secretary has a vested interest in curtailing debate, but he is pre-empting a decision of the Procedure Committee, obstructing further reforms which may be necessitated by the unified Budget


process which he says he supports, and generally voting himself a quiet life, uninterrupted by vigorous parliamentary scrutiny.
In Committee, the Financial Secretary had a good whinge about the difficulties of doing his job. He told us that
No wodge of spare time
existed for parliamentary scrutiny, and that
Time for parliamentary scrutiny is used at the expense not simply of discussions between officials but of the time available for preparing draft clauses, and undertaking public consultations on tax proposals, which could be extremely detailed.—[Official Report, Standing Committee A, 24 June 1993; c. 577.]
That was his defence of his behaviour.

Mr. Ian Taylor: On certain occasions in Committee it was clear that the hon. Gentleman had not waited for the publication of the Finance Bill before drafting his new clauses in any event. So why the worry, given that the Opposition obviously wish to table certain amendments and new clauses?

Mr. Brown: There are well over 200 clauses in the Finance Bill, which we are also charged with scrutinising. I am sure that the hon. Member for Esher (Mr. Taylor) will do me the courtesy of admitting that we thoroughly and systematically scrutinised those clauses. Some of them, such as the clause on value added tax, are about controversial issues. Some of them are about matters of detail and are perhaps of specialist interest only. Nevertheless, in a democracy it is right that all those matters receive not just parliamentary scrutiny but informed parliamentary scrutiny. The Opposition, with limited resources, take seriously the duty of ensuring that the Bill gets such scrutiny.
When discussing the use of parliamentary time in Committee, the Financial Secretary made it clear that he regarded the time spent with civil servants, professional advisers and those who wanted to make representations about the Bill as quality time. He seemed to suggest that the time that he spent with us—the other elected representatives of the people—was at a discount and could not be extended. I almost got the impression that he did not enjoy the time he spent with us, which I am sure could not be right.

Mr. Dorrell: I am grateful to the hon. Gentleman for the opportunity to correct that impression. Nothing gives me greater pleasure than spending time with the hon. Gentleman, his colleagues and my hon. Friends who joined us in Committee.
I did not seek to argue in Committee that time spent with officials was high value time, or to draw a distinction between that and time spent with Parliament. I sought to argue that my responsibility to Parliament is to prepare and present proposals that have been properly worked through and assessed and on which, in many cases, outside interests have been consulted. The purpose of so doing is to ensure that Parliament does not spend its time on the minute detail of the technical aspects which, as we agreed in Committee, with one or two exceptions are not the principal interests of hon. Members. Instead, Parliament can consider the wider political and strategic implications of tax proposals which have been properly worked through and presented to the House for it to decide upon.

Mr. Brown: I am glad that that matter has been cleared up. In that case, however, I do not understand why the

Financial Secretary wants to curtail the amount of time available to the House to consider the Bill. He wants the right to ensure that the Bill does not have to be published until after Christmas. As I understand it, the present structure would not guarantee that in all circumstances, which is why we have to legislate for the extra five parliamentary days.
At the same time, the Financial Secretary is putting into place a timetable that is too tight. It is not too tight in itself, but too tight because of the way in which it interfaces with the Easter recess. The pressures that will be on the Committee to finish that stage before the House rises for the Easter recess will be overwhelming. It will mean that we shall be required not, as we could do now, to sit an extra week without clashing with the Provisional Collection of Taxes Act 1968, but either to carry our deliberations into the Easter recess—which would not be popular—or to curtail discussion. I am certain that the Government would not be willing to allow the Committee stage to hang over the Easter recess and reconvene after Easter, with Report and Third Reading still to be completed before the new date of 5 May. That closing down of parliamentary time by the interface of the new timetable and the Easter recess is one of the principal concerns of the Opposition.

Mr. Dorrell: The hon. Gentleman has been generous in giving way. I have listened to this comments. For the reasons that I gave in Committee—I shall go through them again later if I catch your eye, Mr. Deputy Speaker—I do not accept that the effect of the Government's proposals is to reduce the amount of time available for parliamentary scrutiny.
Will the hon. Gentleman turn his mind to the effect of his proposed amendment on the amount of time available for parliamentary scrutiny? His amendment suggests that we should, in effect, omit the whole clause. I should make it clear that the effect of omitting the clause would not be to leave the PCTA date that would apply to a Budget delivered in November or December as 5 August, but to revert to the generality of law, which is that under the Provisional Collection of Taxes Act, unless a Budget is delivered in March or April, the authority runs out after four months. Therefore, the effect of accepting the hon. Gentleman's amendment would be that the PCTA date of a Budget on 25 November would not be 5 May, as the Government propose, but 25 March.

Mr. Brown: The Financial Secretary has moved from what I thought was the undue exercise of tyranny to crude blackmail. It is not clear from his intervention that the Financial Secretary knows perfectly well that Opposition Members offered a whole series of compromise proposals in Committee. Our view is not that the whole procedure should be completed by April, but the absolute opposite of that. We would have been more than willing to facilitate a legislative change at the time of the Budget or before it if agreement could have been reached that met our legitimate objections about the time given for scrutinising the Finance Bill before the Committee stage and about the amount of time available for consideration of the Bill.
In case there is any doubt, the compromise that we offered in Committee was the date of 5 June rather than 5 May. That would give us an extra month after the recess a—month that we might not take, but at least we would have the option of taking it if issues arose requiring further


discussion or further parliamentary scrutiny. It is not a question of parliamentary tactics. We have always tried to agree with the Government on the way in which we work through the Finance Bill. It is not a vehicle for re-fighting, in parliamentary terms, the battle of the Somme. We accept our responsibility thoroughly to scrutinise all the measures in the Bill because there is nobody else to do it. If we did not undertake that responsibility and took it seriously, Parliament would be much criticised. With the clause, the Financial Secretary is saying, in effect, that Opposition Members may discharge that duty, but only in a timetable set by him and not one that is agreeable to us. I do not want to overstate the quarrel.

Mr. David Winnick: Although I am a member of the Procedure Committee, I have no desire to refer to the Committee's deliberations on this subject, and it would be wrong to do so. Does my hon. Friend agree that, since there is general agreement in the House about the unified Budget and there is no disagreement between the two Front Benches about the desirability of change, it is unfortunate that this reform should bring with it some controversy because the Government are refusing to compromise? Since there is no disagreement about the unified Budget, why have a sticking point between the two sides? The Opposition consider this to be important and it is unfortunate that the Government are adopting this attitude.

Mr. Brown: I agree wholeheartedly with everything that my hon. Friend has said. We are not just in favour of the unified Budget process—we are enthusiastically in favour of it. Our concerns and resentments stem from the fact that the amount of time that will be available for the Opposition and for dissident Members on the Government side to consider these issues will be curtailed. It may be felt that dissident Conservative Members are at a discount in as much as they rarely—not never—vote against the Government. However, within the relative safety of the Committee, they often seek to explore in considerable detail with Ministers matters of specialist interest to themselves or their close friends. Although the detail with which they explore those matters rarely results in a rebel yell, let alone a rebel vote, time is taken to explore matters vigorously with the Treasury Front Bench. That is a right and, I would argue, a duty—so long as it is performed altruistically—which pertains not just to the Opposition but to Government Back Benchers as well. Therefore, I am seeking to protect their interests rather than just those of the Opposition with this amendment.
My view on this matter would be the same if the Labour party were in office and the Conservative party in opposition. It is a test of altruism that those proposing the change can say that this is the way we would like it regardless of whether we are in government. That is the test that we apply to this. As the intervention of my hon. Friend the Member for Walsall, North (Mr. Winnick) made clear, I am saddened that something that should be dealt with by consensus between the two sides has been a matter of deep controversy. It is not an issue that we will let go.
Our preferred way of proceeding is to wait until the Procedure Committee has put its recommendations before the House, for the House to have a debate and then,

through the usual channels, to agree on an acceptable timetable. That timetable may be on the basis of just one year, since this is the first time we shall have the unified Budget procedure. We would then wish to proceed by consensus. We are debating not the contents of the Government's legislation, but the way in which the House should deal with it.
It is not necessary to legislate in the way we are being asked to do and it is certainly not necessary to do it now. It is a gross discourtesy to the Procedure Committee. The Financial Secretary's spurious argument that if we do not agree with his construction there will be nothing available to the House except to resort to the general law of the land can be dealt with easily: we would facilitate any legislation introduced by the Government which reflected the compromise that we wish to reach with them on these matters.

Mr. Ian Taylor: One of the disadvantages that you have, Mr. Deputy Speaker, is that, when the debate moves from the close confines of the Committee to the wide open expanses of the green Benches of the House, you have not participated in the excitement of the debate in which Committee members were privileged to take part. If you had been there, you might have noticed the concern of the excellent hon. Member for Newcastle upon Tyne, East (Mr. Brown). The hon. Gentleman was concerned that more all-night sittings might be needed if his greatest fears were realised and the Committee was truncated.
The hon. Gentleman seemed principally to be worried about spending more nights with his hon. Friend the Member for Hartlepool (Mr. Mandelson), who regaled the Committee more than once at great length—and with occasional wisdom—about his exploits. The hon. Member for Hartlepool included the holiday he was about to take in Majorca in those remarks. Unfortunately, he got lost at that point and forgot to give Committee members the full details. I hope that he will remedy that this afternoon. Most members of the Committee felt that the details of the hon. Member's holiday in Majorca were more interesting than the rest of the speech that he made on that occasion.

Mr. David Willetts: My recollection is that the hon. Member for Newcastle upon Tyne, East was more concerned that he would have to spend the night with the hon. Member for Peckham (Ms Harman) rather than the hon. Member for Hartlepool.

Mr. Taylor: It is true that the Committee members were enthralled and privileged to have large extracts of a book that had been recently published by the hon. Member for Peckham read into the record. I said at the time that that was inevitably a ploy by Labour members of the Committee to ensure that the book would have a wider circulation through Hansard than it would have in its original book form, because the minutes of the Finance Bill Committee are read avidly by a large number of people. I hope that the modest expectations of Labour members of the Committee for that publication were realised.
The debate on whether Parliament will be short-changed in parliamentary scrutiny has arisen out of the principle of the unified Budget. I give full credit to the hon.


Member for Newcastle upon Tyne, East. He clearly stated that he and his Labour Front-Bench colleagues welcome the unified Budget. The House should ponder on that.
In essence, the changes that are created by bringing together the expenditure Budget, or the autumn statement, and the fund-raising Budget—which has normally been in March, except under Labour Governments, when there were several a year—make a significant impact on other procedural matters. The Provisional Collection of Taxes Act 1968 applies in this context.
The amendments are about whether, in terms of that Act, one tries to change the Finance Bill in a way that alters the ability of Parliament to inspect and examine it, and whether the different recesses that will fall when the Bill is introduced impede Parliament's ability to look at the Finance Bill. The Minister clearly stated that the technical day count and the practical reality did not justify the Opposition's worries.
The benefit of a unified Budget is something that many hon. Members have been urging for some time. I join those on the Labour Front Bench in welcoming that. One of the problems that a member of a Finance Bill Committee faces is that he knows that the Red Book that has been previously issued in association with the autumn statement is almost out of date and certainly needs revising. It is therefore difficult to get a complete grip of the Government's expenditure plans in detail, against the taxes that we are examining in that Committee.
The Committee's discussions depend on whether the taxes are to cover last year's estimates of the Government's financial expenditure or whether they relate to the future. This unification is important. We do not usually mention the fact that there are Cabinet Committees, but it is widely known that one such committee is looking even now at the Government's expenditure plans. In a fit of openness, which I welcome, the Government have let it be known that there is a control total for expenditure of £253·5 billion—the Financial Secretary will correct me if the number after the decimal point is wrong. Nevertheless, that is the target for Government expenditure in the forthcoming year.
We do not yet know how it will be divided up. That will be revealed in the autumn statement, when, for the first time, we will simultaneously be given the Government's plans for raising taxation—before the hon. Member for Newcastle upon Tyne, East jumps to his feet, I should add that I use the word "raising" in its most neutral sense; I am not recommending a policy decision—which are always part of the traditional Budget procedure, and their plans for expenditure. That will make for a much more enlightened, and hence a more effective, debate.
I wonder whether Labour Members have taken this into account when giving their rather grudging acceptance of the timetable. When we have the unified Budget—probably in November—much more information will be before the House, so the debate on it will be better.
This will benefit hon. Members on both sides of the House. When we are dealing with Government expenditure of about £253·5 billion and a Government-projected deficit of £50 billion, it is vital to understand what the Government are attempting to cover with basic taxation, what growth patterns they project in the Red Book, and what will be the likely breakdown of expenditure between structural spending and automatic

stabilisers related to the recession. It will help the House when it comes to look at the expenditure side of the fiscal equation to know what the taxation side will look like.

Mr. Nicholas Brown: The hon. Gentleman has obviously given the matter a great deal of thought. What does he understand will happen to the two Industry Act forecasts?

Mr. Taylor: The excitement is in the waiting. There will be a great many forecasts for the hon. Gentleman to get his teeth into. We are all on tenterhooks to find out whether he enjoys the accuracy of the forecasts or whether he wants to be the eighth wise man. I am sure that he will draw his own conclusions in his own time.
The unified Budget will give the House a much broader basis for assessing the way forward, and a much better backdrop to the eventual consideration of the Finance Bill in Committee.
Then there is the problem of the Christmas recess. My hon. Friend the Member for Stamford and Spalding (Mr. Davies) almost over-excited himself with the prospect of getting the Finance Bill before Christmas. Doubtless he reads so quickly that he will already have finished all the novels that he had put aside for the Christmas period, and will eagerly start reading the Finance Bill for his post-turkey Christmas afternoon enjoyment. We all have our foibles; obviously, that is his.
But it is not the critical point to bear in mind when asking whether we properly scrutinise the Finance Bill—it does not matter much whether it is published before Christmas or immediately afterwards. Conservative Back Benchers are well aware that it takes a certain amount of time to go through all the small print of certain Government measures—for instance, to read all the Inland Revenue press releases that go out with the Budget forecasts. They are voluminous enough in themselves.
I suffer occasionally from paper indigestion, and it takes me longer to go through all the press releases and guidance notes that the Inland Revenue put out than perhaps it does the hon. Member for Newcastle upon Tyne, East.

Mr. Nicholas Brown: I understand perfectly what the hon. Gentleman is saying in his capacity as a loyal Back-Bench supporter of the Government, but has it occurred to him that, when he is in opposition, he might welcome slightly more time to scrutinise the Government's proposed legislation?

Mr. Taylor: That is a double hypothetical question: first, whether it is possible for me to be in opposition; secondly, if I were in opposition, whether the then Government would have any legislation. There are double hypotheses there, and I would rather not be tempted down that avenue.
The Christmas recess is a factor, and I look forward to the Financial Secretary's comments on it when he makes his speech, if he catches your eye, Mr. Deputy Speaker. The simple reality is that the most effective job that a Back Bencher can perform in terms of the Finance Bill is to look at the issues.
The exact drafting of the amendments is less important. The hon. Member for Newcastle upon Tyne, East, who speaks on such matters, has often said that the amendments that he has tabled are probing amendments, in which case one does not need the detailed text. One


needs to know the various subjects that are likely to be covered, and they are clearly covered in the general debates on Second Reading and the debates on the Floor of the House before the Bill goes to Committee.
At those stages, various points of principle must be made. If probing amendments are tabled, it gives the House a good opportunity for debate, without necessarily assuming that the Government will accept the amendment. That is happening on the Government Benches. Quite often, if we are concerned about an aspect of Government policy on which we seek clarification and there is no question but that our amendment may be faulty in its preparational drafting, we look to the Government to satisfy us that they are considering the amendment carefully, or will table their own on Report.
I am glad to say that I have sometimes been successful in persuading the Government to do just that. The hon. Member for Newcastle upon Tyne, East has often supported me, particularly on employee share ownership. The system works, and I give him credit for that.
I am less sure of my ground about the work of the officials. If I can sit up all night with the hon. Member for Hartlepool (Mr. Mandelson), officials can stay up all night drafting the Finance Bill. I am not too sure that I wish to give them much comfort. They will have to work even harder under the unified scheme than perhaps they have done before. So be it.
Performance-related pay would be even better, and I know that the Financial Secretary is keen on that. Perhaps brownie points will be awarded in the margin of annotated versions of the Finance Bill in subsequent years.

Mr. Matthew Carrington: We need to be sure that we look after officials, make their work easier and ensure that they work reasonable hours and are not over-straining themselves. If their work is being concertinaed into a shorter period, as will happen as a result of the change in timing, it also means that their work in other periods of the year will be that much less, so there may well be a problem of spreading their burden evenly over the year. Taken overall, their work should be no more and no less.

Mr. Taylor: My hon. Friend makes an interesting point. I must disclose an interest in this matter. I am the Parliamentary Private Secretary to the Chancellor of the Duchy of Lancaster, who is also the Minister with responsibility for public service and science, and who is an excellent contributor to the thinking on how our civil service should develop. If he were in the Chamber, I would pay him a tribute—[Interruption.] Oh: as he is in the Chamber, I am able to pay him the compliments that he deserves, and that he would expect me, as his PPS, to give him.
The important point about the civil service, and particularly the Inland Revenue, is that those on the Committee respect and value enormously the work they do. This year, there will undoubtedly be a much greater work load to try to get the unified Budget before the House by the due date, which will be some time in November.
The only difficulty that I can foresee is that, given that all Back Benchers had to make sure that their Budget representations were in to Ministers by the Chevening weekend—if memory serves me right, that was the first

weekend in January; I have not calculated it backwards, so if an hon. Member in a sedentary position can do it better than I can on my feet, perhaps he would tell me when the equivalent time might be two and a bit months before the November Budget—the new date may well bite heavily into the holidays of officials.
Will the Financial Secretary tell us what the equivalent of the Chevening weekend might be so that Back Benchers can get their acts together and start to gear up to lobby some time in September?

Mr. Carrington: My hon. Friend raises an interesting point. On the timing that he has just given the House, the Chevening weekend will coincide with the party conference. Does that not represent a great opportunity for consulting the whole party on Budget measures at the conference?

Mr. Taylor: The Conservative party, with its democratic conference, could do that. The problem for the Labour party would be that, until it gets its voting structure sorted out, it would find it embarrassing. I am sure that the hon. Member for Newcastle upon Tyne, East would not like me to stray into his private grief about the voting system in the Labour party. I have a suspicion, Mr. Deputy Speaker, that you are not so keen yourself that I stray into the topic of democracy in the Labour party.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. I am keen that we debate the amendment.

Mr. Taylor: I am grateful to you, Mr. Deputy Speaker, for bringing me back to the core of the subject, which is amendment No. 27.
This debate is as serious as the amendment that has been tabled—the amendment having been tabled, the debate follows in character. The Financial Secretary was helpful to the Committee by pointing out some of the timing details. It is interesting, for example, that 5 August is the date in the Provisional Collection of Taxes Act 1968. It is true that, decades ago, the House sat into August, rising just before the Glorious Twelfth. Now, it is normal for the House to rise by the end of July.
Therefore, it is inconceivable that Parliament would be able to scrutinise the Finance Bill until as late as 5 August. There is bound to be some truncation. I hope that the Financial Secretary will take us back through the argument that he gave us in Committee, looking at the effective dates of the Budget as it was in March and the likely number of days that elapsed under the old arrangements in comparison with the new arrangements.
If the Provisional Collection of Taxes Act 1968 is amended as the Government have said it will be to incorporate the new date of 5 May, that gives ample time for proper parliamentary scrutiny without the absolute necessity of all-night sittings. Yet all-night sittings are one of the excitements of the Finance Bill Committee. Serving on that Committe is an honour for hon. Members on both sides of the House. On most other Committees, hon. Members are told to keep quiet, but on that Committee we have ample opportunity to air our views.
The hon. Member for Ashfield (Mr. Hoon) regaled the Committee with his detailed legal and economic knowledge, to the great pleasure of most of us. Those of us who found it difficult to follow him were in a minority, but he was constructive on many of the issues before us.
In those circumstances, it was a pleasure to listen to the hon. Gentleman at 4 in the morning rather than 6 in the evening. It was much more entertaining at that stage, because the debate was mature. Those are the excitements of being on the Finance Bill Committee when it sits all night. All-night sittings enable us to dilate much more on some of the issues than we would be able to do on the truncated time scale of a Committee that felt bound to rise by 10 o'clock in the evening.
I hope that I have enlightened the House about some of the issues at stake. I know that Labour Front-Bench Members feel aggrieved. The skill that they normally show in Committee and the forensic ability of the hon. Member for Newcastle upon Tyne, East are almost undervalued by the amendment. The hon. Gentleman need not be embarrassed.
I have been a member of the Finance Bill Committee since 1987, when I first had the honour to enter this place. The hon. Member for Newcastle upon Tyne, East has also been a member of that Committee since 1987. We have become fixtures: the Finance Bill would not be the Finance Bill without us. If I continue to speak as I am doing, I am sure that I will be a member of the Finance Bill Committee for many years to come. I am sure that the hon. Member for Newcastle upon Tyne, East will be on the Opposition Benches for very many years to come.
The hon. Member and I will be members of the Committee when it sits early in the next new year. However, he underestimates his skills. There is no doubt that there was quality in our debates in Committee this year. There was an eagerness to examine in detail and for rapid dispatch. The Committee rose after not too many late sittings, but a sufficient number to give us the feeling that we had properly scrutinised what the Government were doing.
There was some controversy, but the Committee showed that we do not need length of time to have a quality debate. The hon. Member for Newcastle upon Tyne, East has almost undermined our confidence in his skills by moving the amendment. Therefore, I do not feel that I can urge my colleagues to accept it.

Mr. Malcolm Bruce: The hon. Member for Esher (Mr. Taylor) has made an entertaining contribution which reflected on those who were members of the Committee. His comments suggested that the Committee was a rather cosy club. I feel slightly diffident about intruding into these private exchanges, which have obviously been repeated on more than one occasion.
However, I believe that there is a serious point behind the amendment. Looking at it from the point of view, as I do, of entering the debate for the first time and not the 10th time, it seems to me slightly strange that the Government should introduce a reform which was welcomed by Members in all parts of the House and which seemed to be a constructive way forward and a better way to present the facts of the debate and then follow that immediately with a procedural mechanism for curtailing the very debate that they appear to want to stimulate. That is certainly what it looks like from where I am standing.
The hon. Member for Esher gave a somewhat esoteric, introspective view of how the Committee conducts itself. He rather underplayed the importance of the debate for people outside the House who are seriously affected by the consequences of the Finance Act. Whether or not the Finance Bill Committee carries out its deliberations in a

series of extended sittings is, to some extent for those outside this place, a matter of little concern, although one hears the passing comment that it is a strange way to run business efficiently.
People outside this place are concerned not about the number of hours that the Committee sits, but about the time available to marshal the arguments, to analyse the implications and to present a case if—and this is after all the purpose of having a legislative Committee—we are genuinely to consider the implications and be prepared to review and vary them: in other words, if the debate is genuine.
I have taken the trouble to read the interesting and constructive report of the Treasury and Civil Service Select Committee on the Government's proposals. It seems to me that we are being asked to support a move that is primarily for the convenience of the Treasury rather than for those who are affected by the changes.
I have not been a member of the Finance Bill Committee, but I have been exercised by some of the proposals in this year's Finance Bill. No matter what side of the argument one is on, the VAT proposals have been extremely controversial. As time has passed, the implications of those proposals have been more widely discussed.
I am concerned about the changes in oil taxation. Even within the present timetable, it is instructive to note that yesterday, according to my local daily newspaper, The Press and Journal in Aberdeen, Shell announced that it would be laying off workers as a direct result of the tax changes in this Bill.
That has happened in respect of the present time scale. It will not be of much value if such proposals come after the completion of the process. The shorter the process, the more likely it is that people will not have collected their arguments together in time, I am concerned that these things are likely to be rushed through.
In many cases, the matters we are talking about are extremely technical and their implications are not always easy to understand, even by the companies or individuals that are affected by them, or by the Treasury officials implementing them.
One of the reasons why Finance Bills are so long is that a significant number of their clauses correct the errors and unexpected side effects contained in previous Finance Acts. While it is inevitable that that will happen, it should be an ambition of Treasury Ministers and officials to limit the number of clauses that fall into that category. The shorter the time in which deliberations must be concluded, the more likely it is that we will get things wrong and, as was said in Committee, the longer each Finance Bill is likely to become year by year.
The hon. Member for Stamford and Spalding (Mr. Davies) said that he might end up needing a trailer on the back of his car to take his reading home for Christmas. He is the only Member to think that he will receive the relevant documents before Christmas.
Apart from the question of tidiness and convenience to the Treasury, what is the purpose of bringing the income and expenditure proposals together? It seems to me that it is to ensure that there is a better informed debate about the relationship between the two. In at least the first year or two of the change, it would be better to have a longer rather than shorter period of debate to see how it is conducted. If it becomes apparent, after a year or two, that the timetable can be met, it might be appropriate to adopt


it permanently. But to adopt a new procedure and then insist that the period of debate is shortened, before we have seen how it operates in practice, is wrong and undermines the change.

Mr. Dorrell: The hon. Gentleman has said several times that the Government are seeking to shorten the time available for debate by this clause. I sought to explain that that is not the effect of the clause. Its intention, broadly speaking, is to replicate the present arrangements. As far as it changes the length of time available for debate, it errs on the side of lengthening, not shortening, the time available.

Mr. Bruce: I understand that point, but I believe that the Minister has acknowledged that the practicalities behind the way in which the parliamentary year falls mean that there will be less time available for debate. The Financial Secretary may disagree. When a radical and welcome change is being introduced for the purposes of informing the debate, there is a case for extending rather than containing the time for debate, at least for the first year or two.
The hon. Member for Esher has said that the fact that we are bringing the two parts of the Budget debate together should make it clearer and speedier. That is one point of view. It is equally likely that we will set more hares running which will have to be considered. We should allow time for that.
The current debate is of some interest and should be taking place in the Conservative party, as well as in the Opposition parties, because it is directly affected by the political consequences. Ministers may want to say to the House, "These are the facts. This is the state of the deficit and it must be addressed." In that case we need honesty and openness so that all hon. Members and people outside can face up to the fact that we must cut expenditure and raise more revenue. In those circumstances, we need a climate of genuine and honest debate. I welcome that.
The current debate is whether there should be more hypothecation of taxes. I do not think anybody in the House would or could suggest that all taxes should be hypothecated—that would be wholly unrestrictive and overly populist. The Government must recognise that Governments who say that they will cut taxes and then increase them, and say that the reason for doing so is that they misread the calculations and that the situation is a lot worse than they thought, are pursuing the debate abstrusely.
The objective of the reforms that have been introduced is to make the debate more open, to make it clear to all sides why there is a deficit and what the shortfall is and to enable people to explore at the same time where we can cut expenditure and raise revenue. That is a welcome and constructive change, but it does stimulate more debate and not less.

Mr. Willetts: Will the hon. Gentleman reveal how his party would propose to cut expenditure and raise revenue? I am sure that the electors of Christchurch would be interested in his ideas on that subject.

Mr. Bruce: I would be happy to do that, but Mr. Deputy Speaker would tell me that the purpose of the timetable motion is not to make a campaign speech for the

electors of Christchurch. I have been there, however, and I know that the electors I have met are more enthusiastic about our policies than about those of the Conservative party.

Mr. Deputy Speaker: Order. The hon. Gentleman is now doing something that he said he should not do.

Mr. Bruce: I accept your constraint entirely, Mr. Deputy Speaker.
4.45 pm
If the Financial Secretary is unable to accept the amendment, and if he insists that it is not the Government's intention to shorten the period of debate but to replicate it, that is the minimum that should happen. At the risk of repeating myself, with a new reform such as this, it would be better to extend the debate. All the evidence that I have seen before the Treasury Select Committee shows that there is no problem about extending the debate. The only people concerned about the time scale appear to be the Treasury. The argument that the reform would create a greater period of uncertainty is one that people have lived with for a hundred years.
The argument that the tax year needs to be tidy and that all the relevant matters need to be sewn up in advance has not been a serious factor in previous practical considerations. It is a matter of absolute astonishment to me that the tax year starts on 5 April. To most people that is peculiar and it should be addressed. It has been suggested that we should at some time make the tax year begin at the start of the calendar year, as in most other countries.

Mr. Alan Duncan: That would ruin Christmas.

Mr. Bruce: The hon. Gentleman may say that that would ruin his Christmas, but the longer the time for debate, the more chance he has to leave it to one side and come to it in the new year just as happily.
The Government have introduced a welcome reform, but they should recognise that the provision of a little more time in the first two years would not go amiss.

Mr. Quentin Davies: As I did at the beginning of the Committee stage, I will start by declaring an interest. I am an adviser to National Westminster Securities, which is the investment banking arm of the NatWest group. I am a director of Dewe Rogerson consultants and I am also the parliamentary consultant to the Institute of Taxation. None of those bodies knew that I would speak in the debate this afternoon, nor had any idea of what I would say.
As has already been said, we had a very full discussion of this matter in Committee. The House should be grateful to you, Mr. Deputy Speaker, for allowing us to discuss the matter again on Report. Some very serious issues are raised by the Opposition amendment.
I am very glad that in the fascinating interchange at the beginning of the debate between my hon. Friend the Financial Secretary and the hon. Member for Newcastle upon Tyne, East (Mr. Brown) quite a lot was said about the great constitutional debates of the 17th century. Those debates are pertinent to the matter that we are discussing.
The House will know that, between the 1620s and the 1640s, the great constitutional debates turned on the extent to which taxation should be by the consent of the


Government—or at least by the consent of the taxpayer, if not the Government. Of course, in those days, Parliament considered itself to be the representative of the taxpaying public rather than the whole public. If Pym and Hampden were in our midst this afternoon, they might have added to that principle the need to ensure that taxation legislation, like all other forms of legislation, was comprehensible to those to whom it would apply. In the 17th century, proposed taxation legislation would always have been comprehensible. There might have been a proposal for ship money or exercise duty, but everyone understood what that was about. The provisions bringing those taxes into effect could have been interpreted by any court in accordance with their apparent meaning as debated in this Chamber.
We have moved onwards since the 17th century, but I cannot say that we have moved forwards. It is now a great challenge for this House, the general public and even those in the legal and accounting professions who spend all their time on tax matters to understand the meaning of a Finance Bill. On Second Reading and throughout our discussions in Committee, I protested about the fact that Finance Bills have become steadily longer and more convoluted, and. I make no apology for protesting now because it is a serious issue. Unless Members of Parliament call parliamentary draftsmen to account and react on behalf of the public to the increasing complexity and opacity of taxation legislation, no discipline will be placed on parliamentary draftsmen and no restraint will be placed on the length and complexity of Finance Bills.
The result of that will be extremely undesirable. It will mean a loss to justice because people will not understand the law. They will not claim the allowances properly due to them and will be penalised for making inadequate declarations because they did not understand the law. There will also be considerable economic costs because we will have to pay talented people to spend hours and hours interpreting the legislation. That expense will have to be borne by industry, businesses, individuals and the economy.
How does that relate to the time to be made available for parliamentary scrutiny of Finance Bills? Clearly, if taxes are to be collected for the following year, the more time that we and the outside world have to consider a Finance Bill when it is first drafted and published and before it becomes law, the greater the possibility of our doing our job in this place and scrutinising legislation carefully. That will allow the Government to expound the legislation and justify the measures and a general consensus will develop outside the House that the new taxation proposals are sound and reasonable. That is important for the integrity and reputation of this place, the law and our tax system.
I accept my hon. Friend the Financial Secretary's argument that the Government's proposal on timing will, if anything, increase the parliamentary time available for scrutiny of Finance Bills. With the great mental agility for which he is famous, he succeeded in convincing us in Committee that another five days of parliamentary time would be made available. Although I could not follow his calculations as they seemed extremely complicated, I accept his conclusion.
However, I greatly regret that we did not take this opportunity to provide for a significant qualitative increase in the time available in this place to discuss Finance Bills in future. I say "in this place" because there

are two sides to the public consent that is being given to Finance Bills: first, there is the reaction of the public, the experts who analyse Finance Bills and those who want to make representations to the Government and Parliament before irrevocable decisions are taken; and, secondly, there is the debate in this place.
We are all grateful for the detailed representations that we receive from all sorts of outside bodies on the Government's fiscal proposals in the Budget speech and subsequently in the Finance Bill. I accept that many of those representations are interested but that is perfectly right. We want to hear how individual categories of people or businesses feel that they will be impacted by those measures so that we can take account of their representations. We can discount them to the extent necessary because they are clearly self-interested and we can try to reconcile them with the Government's need for additional revenue or their need to conserve revenue at any time. That is what discussion of the Finance Bill is about.
However, we must give people the time to read the Finance Bill and to lobby their Members of Parliament, and we must leave ourselves enough time to consider those representations and do our homework. It is important that Back Benchers do their homework—the Government do theirs well—but, if we are to play our role, we must have time to do that. Debates must not be foreshortened by the Government's threat that, if we do not make progress, they will be unable to raise revenue. All sorts of obvious disastrous consequences would flow from that. We do not want to become the victims of such moral blackmail if we can avoid it.
In Committee I backed an amendment that sought to set the date by which the Finance Bill should enter law. It suggested 5 July rather than 5 August, which would have given two more months for consideration of the Bill. The Financial Secretary explained—he always makes a convincing argument—that that would cause all sorts of administrative difficulties for the Government. He said that the bureaucracy—the Inland Revenue, Customs and Excise and the Treasury—must spend a lot of time preparing for Finance Bills. However, I greatly regret that the conflict between bureaucratic convenience and open government and parliamentary scrutiny has been resolved in favour of bureaucratic convenience. If hon. Members do not argue against that, nobody ever will and we shall be less able to make a meaningful contribution to the evolution of our tax law. That would be bad for parliamentary sovereignty, the legitimacy of the tax system and the tax system itself.
However complicated and technical the proposed measures are, and however high-minded and conscientious officials may be, unless they are exposed to scrutiny there will inevitably be no counterweight or countervailing discipline to proposals that officialdom decides to put forward, and we shall have worse and worse taxation law.
May I take up a remark made by the Financial Secretary in an intervention in the remarks of the hon. Member for Newcastle upon Tyne, East (Mr. Brown)? The Financial Secretary said that Parliament wanted to be involved in the broad strategic thrust of tax law rather than with its technical details. I wish to challenge that view, which I hope does not reflect the considered opinion of the Financial Secretary.
5 pm
Of course, hon. Members are concerned with the strategic thrust of tax law and with the broad economic consequences of the Government's fiscal policy, and whether that policy is expansionary or restrictive. They are concerned about whether we should reduce our present deficit by reducing expenditure or increasing revenues. They consider where increases or reductions in revenues in the tax system and in general public spending should fall. That is the stuff of our debates in the House on Treasury matters, and there are a number of opportunities to discuss such matters in the course of the year. [Laughter.] The hon. Member for Newcastle upon Tyne, East is laughing—no doubt I take advantage of those opportunities, but he never fails to do so either. I always appreciate the hon. Gentleman's interventions, which are invariably well thought through and interesting—[Interruption.] I did not hear the intervention of the hon. Member for Oxford, East (Mr. Smith), but if he wants to intervene I shall be delighted to give way to him. I find it difficult to hear what he says when he comments from a sedentary position.

Mr. Nicholas Brown: I have a soft spot for the hon. Gentleman, so I shall rescue him. He is chattering on as if he is taking part in a television quiz show where the aim is to keep talking about the Finance Bill without ever stopping. Why does he not confirm that many of his colleagues are at a royal garden party and he has been instructed to keep talking so that we do not have to vote before 6 pm?

Mr. Davies: The hon. Gentleman is being more than a little unfair. He suggests that what I am saying cannot stand on its merits. That is wrong. I contributed to the debates in Committee when, as far as I know, there were no competing social attractions in the west end of London and I said very much the same. The hon. Gentleman cannot accuse me of speaking with a lack of sincerity or lack of consistency today. If I had a less good memory, his intervention might have saved my hon. Friend the Financial Secretary from some remarks that I was about to make in response to his observations this afternoon. It seems a little perverse of the hon. Member for Newcastle upon Tyne, East to intervene and deflect my comments of a mildly and respectfully sceptical nature about a Minister, and a very distinguished one at that.

Mr. Robert Ainsworth: From what the hon. Member is saying, I take it that it is not true that he continues to speak because his hon. Friends are all at the palace. Perhaps he is doing so because he does not want to discuss VAT.

Mr. Deputy Speaker: I am not aware of any activities outside the House, but I would welcome it if the debate were to relate to the amendment.

Mr. Davies: I can say with the greatest sincerity that I do not know the movements of my colleagues nor those of Opposition Members, either this afternoon or during any other afternoon. One is not the keeper of one's colleagues in this place, thank heaven, unless one happens to be a Whip, and I have never had that particular honour. I have no idea who may be doing what this afternoon. I know that you, Mr. Deputy Speaker, will not want me to go into the issue of VAT on domestic fuel, which has already had a generous airing, but I should like to state that I have never avoided an opportunity to stand up in public and

defend the Government's decision on VAT, which I believe to be fundamentally correct, though it may be costly in the short term. Correct and courageous Government decisions often are politically costly in a party political sense in the short term.
The Government are to be more, not less, commended for taking that move—[Interruption.] It is interesting that this is, I think, the first time since I was elected to the House that Labour Members have sought to deflect me from making comments that are not of a purely adulatory nature about the remarks of my right hon. and hon. Friends on the Front Bench.

Mr. Carrington: rose—

Mr. Davies: Perhaps more understandably, one of my hon. Friends is now rising to deflect me from that purpose.

Mr. Carrington: I hesitate to deflect my hon. Friend from his purpose—it is beyond the reason of anyone to try to do so. My hon. Friend is a notable scourge of parliamentary draftsmen. He started his speech on that subject and raised considerable concerns among many Conservative Members on Second Reading and in Committee on the gobbledegook in the Bill. If the time scale for debating the Finance Bill was expanded next year, we would also need to be able to change the procedures for considering the Bill so that we could change the drafting. A notable factor of our discussions on the Finance Bill has been our inability to change the drafting, despite all the cogent arguments advanced by my hon. Friend on how badly drafted some provisions of the Bill are.

Mr. Davies: My hon. Friend makes an extremely good point. I well understand the reluctance of Ministers to agree, on the spot in Committee, to changes in the Bill's drafting. It would lead to much better and more considered tax legislation if, first, there was more time between the publication of the Bill and the commencement of the Committee stage. That would allow more time for the Government to prepare for the Bill's Committee stage by discussing with their officials, the Revenue, and Customs and Excise any suggestions made about the Bill by outside interested parties.
Secondly, although it is a matter of the procedures of the House, it would be better if there were a slightly longer period between the end of the Committee stage and the beginning of Report stage to give the Government more time to consider new drafts and explore the various legal implications of any sensible changes in the Bill's wording. I hope that my hon. Friend the Member for Fulham (Mr. Carrington) agrees that my suggestion is along the lines of his extremely positive and constructive intervention.
It should be common ground between all of us who are concerned—

Mr. Alistair Darling: Sit down.

Mr. Davies: The hon. Gentleman does not like what I am saying. I do not think that he cares about the quality of tax legislation or parliamentary sovereignty, although he mouths all the right rhetoric about democracy and accountability. It is a great pity that I do not receive support on such issues on which there should be consensus among all parliamentarians, irrespective of specific views on the substance or content of the policies.

Mr. Clive Betts: There are two advantages in changing the timetable for discussion of the


Finance Bill. First, it might mean that future debates on it would not clash with Conservative Members' visits to Buckingham palace, which interfere with proper discussion of the Bill. Secondly, future discussions would take place in the middle of winter and Conservative Members might be more concerned about Government policies to impose VAT on the fuel bills of elderly people who will suffer as a result.

Mr. Davies: I gladly concede that the hon. Gentleman is ingenious in finding ways of raising the issue of VAT. He knows my views on that; I do not attempt to avoid the subject—I have not done so in the past, and will not do so in future. I do not resent the hon. Gentleman for raising the subject once again. It seems to be, not only natural and right, but a considerable privilege for Members of Parliament occasionally to be offered invitations by Her Majesty.

Mr. Deputy Speaker: Order. What does that have to do with the amendment? I must insist that the debate continues purely and simply along the lines of the amendment.

Mr. Davies: I am sure that you, Mr. Deputy Speaker, will concede that it had nothing at all to do with the amendment but everything to do with the intervention of the hon. Member for Sheffield, Attercliffe (Mr. Betts). You know that it is not my habit to run away from points made by hon. Members

Mr. Deputy Speaker: Order. It must be the habit of the hon. Gentleman to take note of instructions from the Chair—two wrongs do not make a right.

Mr. Davies: I take the view of the Chair.
I shall return to the point that I was making at the beginning of that series of interventions. Although it is important for the House to be concerned about the broad strategy of fiscal policy—which is of enormous significance to the economy and the country—it is also extremely important for Parliament to be able effectively to scrutinise the details of any legislation, including those of the Finance Bill.
Those of us who were in the private sector before we came to this place know that the devil is often in the detail. One thing that we do in the private sector when we are signing or proposing to sign a contract is read the detail. Surely that principle must apply as much to the Finance Bill as to any aspect of law making.
The Labour party has made it easy for me this afternoon because it has tabled an amendment that, by general agreement, is technically deficient or would produce a complete perversity if passed because we would end up with less time for parliamentary scrutiny, not more. Therefore, I have no dilemma at all, morally or otherwise, and I can say with great enthusiasm that I shall vote against the amendment. Nevertheless, I am glad that we have had a further opportunity to discuss the broad issues of principle that have been raised in this debate.

Mr. Dorrell: We have had a wide-ranging debate on this subject this afternoon. The question before the House is relatively narrow—it concerns the consequences for parliamentary procedure of the move to a unified Budget, which was announced by the former Chancellor in the 1992 Budget.
The hon. Member for Newcastle upon Tyne, East (Mr. Brown) and other hon. Members expressed support for the principle of a unified Budget. The hon. Gentleman even let slip the phrase that he was "enthusiastically in favour or' at least this aspect of the Government's approach to budgetary matters. I am grateful for that support and I share the enthusiasm that has been expressed on both sides of the House.
As the hon. Gentleman made clear, the principal purpose of moving to a unified Budget is to ensure that debate of the budgetary proposals—whether revenue or expenditure oriented—tabled by the Government is better informed and takes place against the background of a recognition of the fiscal realities that any Government face.
It is important to be clear that we are talking about the introduction of a unified Budget. None the less, it is a Budget that will be presented to the House as the Government's proposals and for which the Government will then seek the support of the House with regard to taxation and expenditure. We are not adopting the ideas that have been discussed for many years for a green Budget. When the Finance Bill is published, it will not be in the form of a consultative document—it will be the Government's proposals, for which we shall seek the support of the House and Parliament as a whole.
Nor are we moving in the direction of splitting the traditional Finance Bill between technical measures and tax rate questions—a distinction that some people who are interested in the subject have sought to draw. That distinction is easier to describe in general theory than to recognise in precise practice. It would also lead to two Finance Bills passing through what is already a crowded legislative programme, which is not a proposal that the Government find attractive.
We are talking about a specific Government proposal that the revenue and expenditure aspects of the budgetary process should be brought together into a single process of government during the late summer and autumn of the year and a single process in Parliament that is based on the presentation of the unified Budget in late November or early December.
Against that background, I refer to the proposal tabled by the hon. Member for Newcastle upon Tyne, East for consideration today. He said that he did not understand why the Government felt it necessary to include in the Finance Bill specific proposals for changing the operation of the Provisional Collection of Taxes Act 1968. He asked why we had to move so quickly: why could we not simply leave things as they are and see how they work in the new world? As I explained in an intervention in his speech, simply leaving things as they are is not an option because if the existing Provisional Collection of Taxes Act were allowed to operate without amendment it would have the effect of curtailing significantly the time available for parliamentary debate.
5.15 pm
It is therefore incumbent on the Government to propose changes to the Provisional Collection of Taxes Act to preserve the scope for proper parliamentary debate. The policy steer that has led to that provision being included in the Bill is that we are seeking to replicate in the new world the provisions for parliamentary scrutiny that have existed until now. Essentially, we are replicating the status quo. As I said in an intervention on the hon.


Member for Gordon (Mr. Bruce), we are replicating the status quo but, in so far as we are changing it at all, we are changing it in the direction of extra parliamentary time.
I shall go through the proposed changes to demonstrate to the Committee that the effect of the changes is not, as is suspected in some parts of the House, to curtail debate but simply to replicate the existing arrangements and marginally to increase the time available for debate.
First, I shall examine this subject from the point of view of the change in the total time between Budget day and the day on which the Provisional Collection of Taxes Act authority expires. Under the old system, over the past six years we have seen Budget days vary between the latest date of 20 March and the earliest date of 10 March. Let us say that, on average, Budget day in the old world was fixed at 15 March. Although we originally said that the new Budget day would be some time near the end of November or the beginning of December, we have since refined that to place the emphasis on the new Budget day being at the end of November. Therefore, I take it as a working hypothesis that the new Budget day will be 25 November.
The difference between 15 March and 25 November is roughly three months and 20 days. We have brought forward the anticipated Budget day by roughly three months and 20 days. Our proposal is to bring forward the Provisional Collection of Taxes Act day from 5 August to 5 May. That brings it forward by exactly three months. Therefore, we are bringing forward Budget day by 20 days more than we are bringing forward the Provisional Collection of Taxes Act day, the consequence being that the gap between the two dates is 20 days longer than it is under the present arrangements. That does not lead to a curtailing of parliamentary debate.
The second stage of the argument is that hon. Members say that the calculation takes no account of the effect of recesses on the time available for parliamentary scrutiny. Let us examine the effect of recesses on the lengthened time that will be available between Budget day and the Provisional Collection of Taxes Act day. Under the existing system, between 15 March and 5 August we must accommodate the Easter recess, which normally runs for between one and one and a half weeks—let us say one and a half weeks—and the Whitsun recess, which is always precisely one week. My hon. Friend the Member for Esher (Mr. Taylor) referred to time in August which is, in reality, no longer available for parliamentary scrutiny because most hon. Members would receive extremely badly the suggestion that Parliament should sit into August.
The effect of the existing arrangements is to take out of the time available for parliamentary scrutiny one and a half weeks at Easter, one week at Whit and a further week at the end of the process—a total of three and a half weeks. Under the new arrangements, we shall continue to have to accommodate the Easter recess in one and a half weeks, and the Christmas recess, running probably to three weeks. So there will be four and a half weeks of recess time—an increase in the amount of recess time falling between Budget day and PCTA day of roughly one week. Of the 20 days extra time available, on a crude analysis one week or seven days is taken by extra recesses, leaving an additional 14 days—13 on the precise mathematics—available for parliamentary scrutiny.

Mr. Nicholas Brown: Let us be clear what we are quarrelling about. Our fear is that under the new structure the Finance Bill will not be published until after Christmas

and that there will be unstoppable pressure to complete the Committee stage before the Easter recess. If the Financial Secretary can say either that the Finance Bill will be published before Christmas—so that we and interested parties may study it over Christmas—or that the Government will be willing to continue the Committee stage after the Easter recess, our objections will be met.

Mr. Dorrell: I made it clear in Committee, and I repeat, that I cannot give an assurance that in all circumstances the Finance Bill will be published before Christmas. Nor can I give an absolute assurance that in all years, however late Easter falls, the Committee stage will continue after Easter. What if, for example, Easter fell at the end of March? It does not seem inconceivable that the Committee stage could continue after an Easter day falling in March. The key point is that we must leave time after the Committee stage for Report and Third Reading on the Floor of the House and due time for the Bill to be considered briefly in another place.
If the PCTA date is moved to 5 May as the Government propose, it does not seem to follow that in a normal year Third Reading in this House need be at any time before 30 April. So if the procedure in this House is to close on 30 April and Easter is in March, it is clearly possible to encompass a final week in Committee in April and Report and Third Reading in time for the process to be completed by the end of April.
I had intended to deal with that point by considering the timetable. The third perspective on the timetable is that under the existing arrangements the Finance Bill has been published in recent years roughly on 15 April. In practice, under the existing arrangements we must complete Third Reading in this House by 25 July, which is three months and 10 days. Under the new arrangements, even if the Finance Bill is published after Christmas—it would be published about 10 January—I do not think that in normal circumstances it would be necessary for us to complete Third Reading in this House before 30 April.
Under the new arrangements, therefore, the time between publication and Third Reading would be three months and 20 days, whereas under the existing arrangements the time between publication and Third Reading is three months and 10 days. On that analysis, roughly 10 days more parliamentary time would be available for considering the Finance Bill than there is under the existing arrangements.
I have not sought to argue that under our proposals there will be massive extra time for parliamentary scrutiny. I argue that they broadly replicate our present arrangements and that, in so far as they amend them, they do so by increasing the effective time available for consideration of the issues in this House by making available anything up to 10 days of extra parliamentary time. On that basis, I commend the Government's proposals to the House.

Question put, That the amendment be made:—

The House divided: Ayes 236, Noes 293.

Division No. 328]
[5.24 pm


AYES


Abbott, Ms Diane
Anderson, Donald (Swansea E)


Adams, Mrs Irene
Anderson, Ms Janet (Ros'dale)


Ainger, Nick
Armstrong, Hilary


Ainsworth, Robert (Cov'try NE)
Banks, Tony (Newham NW)


Allen, Graham
Barnes, Harry


Alton, David
Barron, Kevin






Battle, John
Gerrard, Neil


Beckett, Rt Hon Margaret
Godman, Dr Norman A.


Beith, Rt Hon A. J.
Godsiff, Roger


Bell, Stuart
Golding, Mrs Llin


Benn, Rt Hon Tony
Gordon, Mildred


Bennett, Andrew F.
Gould, Bryan


Berry, Dr. Roger
Graham, Thomas


Betts, Clive
Griffiths, Nigel (Edinburgh S)


Blair, Tony
Grocott, Bruce


Boyce, Jimmy
Gunnell, John


Boyes, Roland
Hain, Peter


Bradley, Keith
Hall, Mike


Bray, Dr Jeremy
Hanson, David


Brown, N. (N'c'tle upon Tyne E)
Hardy, Peter


Bruce, Malcolm (Gordon)
Harman, Ms Harriet


Burden, Richard
Harvey, Nick


Byers, Stephen
Heppell, John


Caborn, Richard
Hill, Keith (Streatham)


Callaghan, Jim
Hinchliffe, David


Campbell, Mrs Anne (C'bridge)
Hoey, Kate


Campbell, Menzies (Fife NE)
Hogg, Norman (Cumbernauld)


Campbell, Ronnie (Blyth V)
Home Robertson, John


Campbell-Savours, D. N.
Hoon, Geoffrey


Canavan, Dennis
Howarth, George (Knowsley N)


Cann, Jamie
Howells, Dr. Kim (Pontypridd)


Carlile, Alexander (Montgomry)
Hoyle, Doug


Chisholm, Malcolm
Hughes, Kevin (Doncaster N)


Clapham, Michael
Hughes, Robert (Aberdeen N)


Clark, Dr David (South Shields)
Hughes, Roy (Newport E)


Clarke, Eric (Midlothian)
Hughes, Simon (Southwark)


Clarke, Tom (Monklands W)
Hutton, John


Clelland, David
Illsley, Eric


Clwyd, Mrs Ann
Ingram, Adam


Coffey, Ann
Jackson, Glenda (H'stead)


Connarty, Michael
Jackson, Helen (Shef'ld, H)


Cook, Frank (Stockton N)
Jamieson, David


Cook, Robin (Livingston)
Janner, Greville


Corbett, Robin
Johnston, Sir Russell


Corbyn, Jeremy
Jones, Barry (Alyn and D'side)


Corston, Ms Jean
Jones, Martyn (Clwyd, SW)


Cousins, Jim
Jowell, Tessa


Cox, Tom
Kaufman, Rt Hon Gerald


Cryer, Bob
Kennedy, Charles (Ross,C&S)


Cummings, John
Kennedy, Jane (Lpool Brdgn)


Cunliffe, Lawrence
Kilfoyle, Peter


Cunningham, Jim (Covy SE)
Kinnock, Rt Hon Neil (Islwyn)


Cunningham, Rt Hon Dr John
Kirkwood, Archy


Dalyell, Tarn
Lestor, Joan (Eccles)


Darling, Alistair
Litherland, Robert


Davidson, Ian
Livingstone, Ken


Davies, Bryan (Oldham C'tral)
Llwyd, Elfyn


Davies, Rt Hon Denzil (Llanelli)
Loyden, Eddie


Davies, Ron (Caerphilly)
Lynne, Ms Liz


Davis, Terry (B'ham, H'dga H'I)
McAllion, John


Dewar, Donald
McAvoy, Thomas


Dixon, Don
McCartney, Ian


Dobson, Frank
Macdonald, Calum


Dowd, Jim
McKelvey, William


Dunnachie, Jimmy
McLeish, Henry


Dunwoody, Mrs Gwyneth
McNamara, Kevin


Eagle, Ms Angela
Madden, Max


Eastham, Ken
Mahon, Alice


Enright, Derek
Mandelson, Peter


Etherington, Bill
Marek, Dr John


Evans, John (St Helens N)
Marshall, David (Shettleston)


Ewing, Mrs Margaret
Marshall, Jim (Leicester, S)


Fatchett, Derek
Martlew, Eric


Faulds, Andrew
Maxton, John


Field, Frank (Birkenhead)
Meacher, Michael


Fisher, Mark
Michie, Bill (Sheffield Heeley)


Flynn, Paul
Michie, Mrs Ray (Argyll Bute)


Foster, Rt Hon Derek
Milburn, Alan


Foster, Don (Bath)
Miller, Andrew


Foulkes, George
Mitchell, Austin (Gt Grimsby)


Fraser, John
Moonie, Dr Lewis


Fyfe, Maria
Morgan, Rhodri


Galloway, George
Morris, Rt Hon A. (Wy'nshawe)


Gapes, Mike
Morris, Estelle (B'ham Yardley)


Garrett, John
Morris, Rt Hon J. (Aberavon)


George, Bruce
Mowlam, Marjorie





Mudie, George
Short, Clare


Mullin, Chris
Simpson, Alan


Murphy, Paul
Skinner, Dennis


Oakes, Rt Hon Gordon
Smith, Andrew (Oxford E)


O'Brien, Michael (N W'kshire)
Smith, C. (Isl'ton S & F'sbury)


O'Brien, William (Normanton)
Smith, Rt Hon John (M'kl'ds E)


O'Hara, Edward
Snape, Peter


Olner, William
Soley, Clive


O'Neill, Martin
Spearing, Nigel


Patchett, Terry
Spellar, John


Pendry, Tom
Steel, Rt Hon Sir David


Pickthall, Colin
Steinberg, Gerry


Pike, Peter L.
Stevenson, George


Powell, Ray (Ogmore)
Straw, Jack


Prentice, Ms Bridget (Lew'm E)
Taylor, Matthew (Truro)


Prentice, Gordon (Pendle)
Tipping, Paddy


Prescott, John
Turner, Dennis


Primarolo, Dawn
Tyler, Paul


Purchase, Ken
Vaz, Keith


Quin, Ms Joyce
Walker, Rt Hon Sir Harold


Radice, Giles
Walley, Joan


Redmond, Martin
Wareing, Robert N


Rendel, David
Williams, Rt Hon Alan (Sw'n W)


Robertson, George (Hamilton)
Williams, Alan W (Carmarthen)


Robinson, Geoffrey (Co'try NW)
Wilson, Brian


Roche, Mrs. Barbara
Winnick, David


Rogers, Allan
Wise, Audrey


Rooney, Terry
Worthington, Tony


Ross, Ernie (Dundee W)
Wright, Dr Tony


Rowlands, Ted
Young, David (Bolton SE)


Salmond, Alex



Sheerman, Barry
Tellers for the Ayes:


Sheldon, Rt Hon Robert
Mr. Alan Meale and Mr. Gordon McMaster.


Shore, Rt Hon Peter





NOES


Ainsworth, Peter (East Surrey)
Carlisle, Kenneth (Lincoln)


Aitken, Jonathan
Carrington, Matthew


Alexander, Richard
Carttiss, Michael


Alison, Rt Hon Michael (Selby)
Cash, William


Allason, Rupert (Torbay)
Channon, Rt Hon Paul


Amess, David
Chapman, Sydney


Ancram, Michael
Clappison, James


Arbuthnot, James
Clark, Dr Michael (Rochford)


Arnold, Jacques (Gravesham)
Clarke, Rt Hon Kenneth (Ruclif)


Arnold, Sir Thomas (Hazel Grv)
Clifton-Brown, Geoffrey


Ashby, David
Coe, Sebastian


Aspinwall, Jack
Colvin, Michael


Atkins, Robert
Congdon, David


Atkinson, David (Bour'mouth E)
Conway, Derek


Atkinson, Peter (Hexham)
Coombs, Anthony (Wyre For'st)


Baker, Nicholas (Dorset North)
Coombs, Simon (Swindon)


Baldry, Tony
Cope, Rt Hon Sir John


Banks, Matthew (Southport)
Couchman, James


Banks, Robert (Harrogate)
Cran, James


Bates, Michael
Currie, Mrs Edwina (S D'by'ire)


Beggs, Roy
Curry, David (Skipton & Ripon)


Bellingham, Henry
Davies, Quentin (Stamford)


Beresford, Sir Paul
Davis, David (Boothferry)


Biffen, Rt Hon John
Day, Stephen


Blackburn, Dr John G.
Deva, Nirj Joseph


Body, Sir Richard
Devlin, Tim


Bonsor, Sir Nicholas
Dickens, Geoffrey


Booth, Hartley
Dicks, Terry


Boswell, Tim
Dorrell, Stephen


Bowden, Andrew
Douglas-Hamilton, Lord James


Bowis, John
Dover, Den


Boyson, Rt Hon Sir Rhodes
Duncan, Alan


Brandreth, Gyles
Duncan Smith, Iain


Brazier, Julian
Dunn, Bob


Bright, Graham
Durant, Sir Anthony


Brooke, Rt Hon Peter
Dykes, Hugh


Brown, M. (Brigg & Cl'thorpes)
Eggar, Tim


Browning, Mrs. Angela
Elletson, Harold


Bruce, Ian (S Dorset)
Emery, Rt Hon Sir Peter


Budgen, Nicholas
Evans, David (Welwyn Hatfield)


Burns, Simon
Evans, Jonathan (Brecon)


Burt, Alistair
Evans, Nigel (Ribble Valley)


Butcher, John
Evans, Roger (Monmouth)


Butler, Peter
Evennett, David






Faber, David
Lidington, David


Fabricant, Michael
Lightbown, David


Fairbairn, Sir Nicholas
Lilley, Rt Hon Peter


Fenner, Dame Peggy
Lloyd, Peter (Fareham)


Field, Barry (Isle of Wight)
Luff, Peter


Fishburn, Dudley
Lyell, Rt Hon Sir Nicholas


Forman, Nigel
MacGregor, Rt Hon John


Forsyth, Michael (Stirling)
MacKay, Andrew


Forsythe, Clifford (Antrim S)
Maclean, David


Forth, Eric
McNair-Wilson, Sir Patrick


Fowler, Rt Hon Sir Norman
Madel, David


Fox, Dr Liam (Woodspring)
Maitland, Lady Olga


Fox, Sir Marcus (Shipley)
Malone, Gerald


Freeman, Rt Hon Roger
Mans, Keith


French, Douglas
Marland, Paul


Fry, Peter
Marlow, Tony


Gale, Roger
Marshall, John (Hendon S)


Gardiner, Sir George
Marshall, Sir Michael (Arundel)


Garnier, Edward
Martin, David (Portsmouth S)


Gill, Christopher
Mates, Michael


Gillan, Cheryl
Mawhinney, Dr Brian


Goodlad, Rt Hon Alastair
Mayhew, Rt Hon Sir Patrick


Goodson-Wickes, Dr Charles
Merchant, Piers


Gorman, Mrs Teresa
Milligan, Stephen


Gorst, John
Mills, Iain


Grant, Sir Anthony (Cambs SW)
Mitchell, Andrew (Gedling)


Greenway, Harry (Ealing N)
Mitchell, Sir David (Hants NW)


Greenway, John (Ryedale)
Monro, Sir Hector


Griffiths, Peter (Portsmouth, N)
Montgomery, Sir Fergus


Grylls, Sir Michael
Needham, Richard


Gummer, Rt Hon John Selwyn
Neubert, Sir Michael


Hague, William
Newton, Rt Hon Tony


Hamilton, Rt Hon Archie (Epsom)
Nicholls, Patrick


Hamilton, Neil (Tatton)
Nicholson, David (Taunton)


Hanley, Jeremy
Nicholson, Emma (Devon West)


Hannam, Sir John
Norris, Steve


Hargreaves, Andrew
Onslow, Rt Hon Sir Cranley


Harris, David
Oppenheim, Phillip


Haselhurst, Alan
Ottaway, Richard


Hawkins, Nick
Page, Richard


Hawksley, Warren
Paice, James


Hayes, Jerry
Pattie, Rt Hon Sir Geoffrey


Heald, Oliver
Pawsey, James


Heath, Rt Hon Sir Edward
Peacock, Mrs Elizabeth


Heathcoat-Amory, David
Pickles, Eric


Hendry, Charles
Porter, Barry (Wirral S)


Higgins, Rt Hon Sir Terence L.
Porter, David (Waveney)


Hill, James (Southampton Test)
Portillo, Rt Hon Michael


Hogg, Rt Hon Douglas (G'tham)
Powell, William (Corby)


Horam, John
Redwood, Rt Hon John


Hordern, Rt Hon Sir Peter
Renton, Rt Hon Tim


Howard, Rt Hon Michael
Richards, Rod


Howarth, Alan (Strat'rd-on-A)
Rifkind, Rt Hon. Malcolm


Howell, Rt Hon David (G'dford)
Robathan, Andrew


Howell, Sir Ralph (N Norfolk)
Roberts, Rt Hon Sir Wyn


Hunt, Sir John (Ravensbourne)
Robertson, Raymond (Ab'd'n S)


Hurd, Rt Hon Douglas
Robinson, Mark (Somerton)


Jackson, Robert (Wantage)
Roe, Mrs Marion (Broxbourne)


Jenkin, Bernard
Ross, William (E Londonderry)


Jessel, Toby
Rowe, Andrew (Mid Kent)


Johnson Smith, Sir Geoffrey
Rumbold, Rt Hon Dame Angela


Jones, Gwilym (Cardiff N)
Ryder, Rt Hon Richard


Jones, Robert B. (W Hertfdshr)
Sackville, Tom


Jopling, Rt Hon Michael
Sainsbury, Rt Hon Tim


Key, Robert
Scott, Rt Hon Nicholas


Kilfedder, Sir James
Shaw, David (Dover)


King, Rt Hon Tom
Shaw, Sir Giles (Pudsey)


Kirkhope, Timothy
Shepherd, Richard (Aldridge)


Knapman, Roger
Sims, Roger


Knight, Mrs Angela (Erewash)
Skeet, Sir Trevor


Knight, Greg (Derby N)
Smith, Tim (Beaconsfield)


Knight, Dame Jill (Bir'm E'st'n)
Smyth, Rev Martin (Belfast S)


Kynoch, George (Kincardine)
Speed, Sir Keith


Lait, Mrs Jacqui
Spencer, Sir Derek


Lamont, Rt Hon Norman
Spicer, Sir James (W Dorset)


Lang, Rt Hon Ian
Spicer, Michael (S Worcs)


Lawrence, Sir Ivan
Spring, Richard


Legg, Barry
Sproat, Iain


Lennox-Boyd, Mark
Squire, Robin (Hornchurch)


Lester, Jim (Broxtowe)
Stanley, Rt Hon Sir John





Steen, Anthony
Viggers, Peter


Stern, Michael
Waldegrave, Rt Hon William


Stewart, Allan
Walden, George


Streeter, Gary
Walker, A. Cecil (Belfast N)


Sumberg, David
Waller, Gary


Sweeney, Walter
Ward, John


Sykes, John
Wardle, Charles (Bexhill)


Tapsell, Sir Peter
Waterson, Nigel


Taylor, Ian (Esher)
Watts, John


Taylor, Rt Hon John D. (Strgfd)
Wells, Bowen


Taylor, John M. (Solihull)
Whittingdale, John


Taylor, Sir Teddy (Southend, E)
Widdecombe, Ann


Temple-Morris, Peter
Wiggin, Sir Jerry


Thomason, Roy
Willetts, David


Thompson, Sir Donald (C'er V)
Wilshire, David


Thompson, Patrick (Norwich N)
Winterton, Mrs Ann (Congleton)


Thornton, Sir Malcolm
Winterton, Nicholas (Macc'f'ld)


Townend, John (Bridlington)
Wolfson, Mark


Townsend, Cyril D. (Bexl'yh'th)
Wood, Timothy


Tracey, Richard
Yeo, Tim


Tredinnick, David



Trend, Michael
Tellers for the Noes:


Trotter, Neville
Mr. Irvine Patrick and Mr. Robert G. Hughes.


Twinn, Dr Ian



Vaughan, Sir Gerard

Question accordingly negatived.

Clause 207

RESIDENCE: AVAILABLE ACCOMMODATION

Mr. Nicholas Brown: I beg to move amendment No. 28, in page 160, line 24, leave out from beginning to end of line 4 on page 161.
A Budget that raises taxes, extends value added tax to domestic fuel, readjusts advance corporation tax in such a way as to impose a substantial burden on charities and pension funds, places a 1 per cent. increase on employees' national insurance contributions, refrains from indexing allowances and, in particular, restricts mortgage tax relief and married couple's allowance to the new 20 per cent. tax band, especially when combined with significant increases in excise duties—most noticeably, duties on petrol and cigarettes—is a tax-raising Budget.
The House now has a rare opportunity to discuss a tax concession. Admittedly, it is one that will cost only some £10 million in 1994–95. Nevertheless, it is a reduction in the tax burden. Over and over again, the Chief Secretary has spoken about the need for deficit reduction, tax increases and public expenditure cuts. Admittedly, he says less about why we are in this position, and he did not make these points so forcefully before the last general election, but he makes them emphatically now.
Let us take the Chief Secretary at his word. Let us also take at his word the hon. Member for Southend, East (Sir T. Taylor), who said yesterday:
If one's country is bust".—[Official Report, 12 July 1993; Vol. 228, c. 757.]
We were also told by the hon. Member for Corby (Mr. Powell) that the Budget contains serious errors of judgment. If we are indeed in such difficult circumstances, as even Conservative Members seem to allege that we are, it must be extraordinarily difficult—1 think that we understand the difficulty—for the Government to give a tax break to anyone. However, after careful consideration, the Conservative Government have found a group of people who, even in these difficult times, require a tax concession.
Who are these people? I know that the most compassionate of my hon. Friends, amazed at the


discovery of a group of disadvantaged citizens so deserving of relief that even this Government have noticed their plight, will be wondering if enough is being done for those people. Suggestions of food parcels, perhaps, could well emanate from my hon. Friends.
These people are not the poorest, most downtrodden in our society. This relief that the parliamentary Labour party is seeking to withdraw is to go to people who have substantial means, who are rich—people to whom the right hon. Member for Kingston upon Thames (Mr. Lamont), the former Chancellor, used to refer as the internationally mobile. This concession to them is being made at a time when the rest of the people of this country are being urged to tighten their belts.
The clause weakens the available accommodation test for residency. It is a relief that, were he to return to this country—if only to ask for his money back from the Conservative party—would be available to Mr. Asil Nadir. There are those who think that the Conservative party has already done enough to help Mr. Nadir, but that is clearly not the view of Treasury Ministers. Indeed, his plight—not his flight—and that of those like him was given extra special consideration by the Financial Secretary before the clause was inserted in the Bill.
In Committee, I was able to make reference to the script for a first-rate Granada Television "World in Action" programme that dealt with tax avoidance and evasion. There was a scene in it—to which I did not refer in Committee but which, I am sure, will inform the debate on the Floor of the House—that included a very familiar landmark, and the commentator said that this was another of Asil Nadir's tax havens. You will be astonished to hear, Mr. Deputy Speaker, that this was a shot of the fountain in Trafalgar square. The commentary went on as follows:
WORLD IN ACTION has discovered that UK tax rules allowed Nadir a privileged status known as non domicile. So although he was one of the richest men living in Britain he paid comparatively little tax here. But our tax laws allowed Nadir to acquire several homes in Britain. Through an offshore trust he owned a country mansion, Baggrave Hall in Leicestershire.
The commentator went on to quote a tax partner from Moores Rowland, a Mr. Eastaway, who said:
To have a non UK domicile is one of the great secrets of turning the United Kingdom into a tax haven.
5.45 pm
I am not sure that the House wants to turn the United Kingdom into a tax haven. I am certainly not sure that, in this time of stringency, when substantial imposts are necessary for all our other fellow citizens, we should be making an albeit relatively modest relaxation in the rules to give money to people who already seem to have rather large sums of money available to them. I do not understand why we should do that, especially in the present economic climate.
The Financial Secretary, in fairness to him, tried to explain it in Committee. As an explanation of why the clause was in the Bill, he said:
It was represented to me, very persuasively, that"—
the clause—
has dissuaded business men—and, indeed, tourists, though my principal concern is business men—from including this country in the range of options that they consider when making business decisions."—[Official Report, Standing Committee A, 24 June 1993; c. 592.]
The words that stick in my mind from that speech are "very persuasively". I am not certain what the Financial Secretary meant by those words, but "Business Age"

magazine draws our attention to some £71 million worth of unexplained money in the Conservative party's accounts. "Business Age" has provided a helpful guide to the big donors and their possible motivation, on the assumption that that motivation extends beyond disinterested public spirit.
The reason most frequently cited for giving these large donations to the Conservative party is that it is in recognition and support of the Government's retention of favourable tax breaks for United Kingdom overseas subjects. Those donors are just the sort of people who could benefit from the changes that we are now discussing.
What sort of an argument is £71 million? To borrow an expression from the Financial Secretary, it is a very persuasive argument. It is my contention that if, in difficult times, it is necessary to increase the tax burden on our fellow citizens, any concession has to be very carefully considered. This is a concession to very rich people who do not, in any event, pay their fair share of tax in this country. We make this concession at a time when we are being asked, in the same Finance Bill, to make the most regressive changes to the value added tax regime that it would be possible to devise.
Let me make it clear that I would not give these tax-dodging scoundrels the benefit of this clause in any event. It is a handout from the public purse that cannot be justified. In the present circumstances, it is positively grotesque.

Mr. Beith: I share the view of the hon. Member for Newcastle upon Tyne, East (Mr. Brown) that this is a worrying aspect of the Finance Bill. Like him, I studied the "Business Age" list of a series of donors to the Conservative party and was very struck by the way in which the motives were listed. There appeared again and again the motive of supporting the maintenance of tax breaks for United Kingdom subjects overseas. There were one or two large donors whose motives were described as completely unexplained. But there was a very large group—it includes people who, I believe, would say this quite clearly, and probably publicly, if asked—who were grateful to the present Government of the United Kingdom for maintaining a situation in which they felt that they were relatively favourably treated under United Kingdom tax laws. The sort of concession which is at the heart of that is the ability to take advantage of the residence rules.
It is difficult for Ministers to detach themselves from these issues when explaining them to the House. It is particularly difficult for the Paymaster General. When he was the Conservative party's vice-chairman and working at Conservative central office, I think that all these things must have passed him by. I cannot imagine that he was involved with any of the mysterious, undisclosed accounts that were published by river companies. I think that they just stuck him behind a desk, that it all passed him by and that it was handled by other people. I suspect that a lot of that goes on in Conservative central office.
What is becoming increasingly clear, however, is that a large number of people overseas are now prepared to put very substantial sums of money in the way of the Conservative party, if it is considered appropriate to do so, by way of accounts held overseas whose purposes are unidentified. Some people and some groups are prepared


to do that because they like the tax treatment that is afforded to United Kingdom subjects who are resident abroad.
There are other motives. There are those who want a favourable regulatory regime for their companies. Others are concerned about foreign policy issues. The single largest group, however, appears to be those who find this kind of tax treatment advantageous to them. When the Minister seeks to explain this, he will be judged not simply by his explanation but against the background of the substantial donations that have been made to his party by people who like this sort of thing.

Mr. Dorrell: The hon. Member for Newcastle upon Tyne, East (Mr. Brown) and the right hon. Member for Berwick-upon-Tweed (Mr. Beith) sounded more than mildly implausible when whipping themselves into a synthetic fury over this question. If it were true that the Government were interested in finding ways of safeguarding nefarious activities of the kind about which they are both concerned, it is profoundly improbable that it would have been this Government who tabled a proposal in 1988 to revise precisely the rules that apply now to the taxation of United Kingdom residents who are not domiciled in this country.
The issues that the hon. Gentleman and the right hon. Gentleman have hinted at are on the table and in the public domain at least in part because the Government published a consultative document in 1988 that launched public discussion of exactly the issues that they raised. Neither of them, however, chose to tell the House about the results of that consultation. Virtually with one voice, the representations to the Government on that subject, from those of all political persuasions, were that it would be damaging to Britain's interests to go down the route that had been suggested in the consultative document, a document tabled on the authority of Ministers of this Government in 1988.

Mr. Nicholas Brown: Most of the representations—not all of them, I accept—were from people who would be disadvantaged if the changes were made.

Mr. Dorrell: That hardly distinguishes this representation from any other representations in which the Government are engaged. My point is that the overwhelming majority of the representations were hostile to the ideas that Ministers of this Government had tabled.
Arguments were advanced in principle against the proposals. The arguments that were advanced—by, I stress, people of all political points of view—were precisely from the perspective of the disadvantaged citizen, the perspective that was espoused so eloquently by the hon. Member for Newcastle upon Tyne, East. The argument was—I find it persuasive—that to go down the route envisaged in the 1988 consultative document would make this country a less attractive place in which internationally mobile business men, whom the hon. Gentleman correctly identified as a legitimate target for consideration, could do business.
It was for that reason that the proposals in the consultative document were dropped. The announcement was made in 1989. As far as I know, there was no great

outcry from either the Labour party or the Liberal Democrats when the decision was announced, because it was recognised to be in response to public concern.
The clause is motivated by precisely the same perspective and the same thought processes as those that led to the dropping of the 1988 proposal—that when considering who should pay tax in this country, the Government ought to pay regard to the proper priorities if we are to attract internationally mobile business activity to the United Kingdom. It was for that reason that we dropped the 1988 proposal. We did so in response to public consultation. Precisely the same reasons led us to table the clause; therefore, I oppose amendment No. 28.
I want tax to be raised fairly from people who are resident in this country. I also want there to be a tax system that is friendly to internationally mobile businesses. The hon. Member for Newcastle upon Tyne, East made it clear that he regards that as a secondary objective. I regard it as a primary objective.

Amendment negatived.

Schedule 2

VALUE ADDED TAX: PENALTIES ETC.

Amendment made: No. 16, in page 167, line 13, leave out 'and' and insert—
'(aa) in paragraph (b) of subsection (5) of that section, for the words from "have power" to the end of that paragraph there shall be substituted "have power under section 15A below to reduce a penalty under this section,"; and'.—[Sir John Cope.]

Schedule 5

REMOVAL EXPENSES AND BENEFITS

Mr. Beith: I beg to move amendment No. 12, in page 200, line 26, leave out `6th April 1993' and insert `4th April 1994'.

Mr. Deputy Speaker: With this, it will be convenient to discuss the following amendments: No. 13, in page 200, line 28, leave out `6th April 1993' and insert '4th April 1994'.
No. 11, in page 200, line 30, leave out `6th April 1993' and insert '4th April 1994'.

Mr. Beith: This group of amendments is all about relocation expenses and their tax treatment. The amendments would delay the implementation of the new regime for taxing relocation expenses.
The issue was dealt with fairly extensively in Committee, but we were unable then to persuade the Government to raise the cap that they have placed on those relocation expenses that are non-taxable. We proposed that that tax threshold should be very much higher to reflect the real relocation costs. We propose in the amendments that there should at least be a transitional period.
The Government have just told us how important it is to provide favourable—indeed, generous—tax treatment to internationally mobile business men, yet they have failed to accept the case put to them by British industry that there should be more favourable tax treatment of those who are forced to move if business in this country is to be successful and efficient.
We are talking about firms that need to relocate people, if they are to succeed. We are referring to firms that have


to cope with major changes in their industry and in their markets. We are referring also to firms that are having to adapt and to firms that are feeling the consequences of the recession, yet they are trying to keep people in employment. Often, the only way in which they can keep people in employment and avoid redundancy is by relocation. They may relocate a whole plant to another site, or they may strengthen, through importing skilled people, a plant that would otherwise go to the wall. Relocation of this kind is important if businesses are to be flexible and able to adapt.
Relocation is difficult to achieve in the United Kingdom context, because of our housing problems. The rented housing sector is largely dominated by local authority housing, which makes it very difficult for people to move from one area to another. The private housing sector has been severely affected by the consequences of the recession. When, therefore, a company says to somebody, "We want you to move," he is likely to reply, "I can't afford to move on my wages." The company then has to construct a package that makes it feasible for that person to move.
The package will often involve help with removal expenses, but that is only the beginning of the story. It may be some time before the person concerned can sell his house or buy a house in the area where he has been relocated. All sorts of additional ancillary costs that affect families may be involved. Most of the firms involved—for example, Barclays bank, which does a great deal of this, estimate that the cost of relocation is between £20,000 and £30,000. That is the average cost of many of these removal and relocation packages. The Government, however, have set their face against accepting that that is the average cost of relocation packages. We seek to persuade them at least to make provision for a transitional period.
I have said that the Government have set their face against relocation expenses at this level. That is not quite the case. Among people in the public sector, there has been considerable concern about how, given the provision, they will relocate. Several Government Departments are involved in substantial relocation activity. Indeed, hon. Members of all parties have been trying to persuade the Government to relocate some of their work—to transfer it from the south-east to the areas of highest unemployment, for example.
6 pm
Other factors are involved in the relocation of Government Departments. Am I right in thinking that the Treasury has approved the grossing up of relocation expenses above the £8,000 limit paid to civil servants? Is it true that Departments know perfectly well that £8,000 is well below the real figure? I believe that they know perfectly well that much larger relocation packages will be necessary. It seems to me that Departments have been told by the Treasury that £8,000 is a figure plucked out of the air to be put in the Finance Bill. It appears that the Treasury is saying, "If you find that it is necessary to pay people £15,000, £20,000 or £25,000, you must gross up the amount. You must pay that amount plus what is necessary to bring it up to the amount originally intended." It is nonsensical if the Treasury itself—the very Department responsible for the Bill—has already admitted that the amount is too small and if Departments are already being told to get around the rules so that people may receive the much larger amounts that they know are involved.
It is likely that the Government's proposal will be harmful to industry. Firms will have difficulty with relocation packages unless they adopt the strategy that the Treasury is suggesting to Government Departments. Labour mobility will be harmed and relocation costs will be increased. Firms will have to gross up, as the Treasury suggests. There may be even harm to inward investment, which often involves foreign firms in the relocation of personnel in order to have key people at a new plant. Firms already struggling with relocation because they must concentrate operations on a single site will face higher costs. Training will be undermined as firms lay off partially trained people and re-employ to save on the expenses of relocating skilled people.
In these circumstances, the very least we must ask of the Government is that they provide a little more time for industry to adapt to the new and very restrictive regime. The proposals extend to a 12-page schedule, so they will clearly be quite complicated to implement. A period of grace would at least be of some help. If a new system were started on 6 April, there would be a period of notice of only two weeks—the interval between the Budget and the beginning of the financial year. No business plans relocation on the basis of a two-week period. Relocations are planned on a time scale of months or years. Many relocations already in progress have been planned long ago. In some cases, employees will be liable to tax on, say, £25,000—or £25,000 minus £8,000—while in others they will not, depending on the removal date. Some people in a firm will be adversely affected. If there were a period of notice—if this provision did not have to be implemented until next April—firms could plan around the scheme; thus, we could avoid a situation in which some people involved in a particular relocation exercise were much more favourably treated, from a tax point of view, than others.
Industry ought to be given some time to adapt. I hope that the Chief Secretary to the Treasury will not further distract the Financial Secretary as this is a matter that industry regards as very important. A period of grace would at least help us through the worst of the aftermath of the recession. The Government's view—we all hope that they are right—is that recovery is under way. A further year before the falling of the axe on tax-free relocation expenses would give a little more opportunity to firms still adapting as a direct consequence of recession, so that they would not have to abandon relocation packages on the ground that they could not afford them, or gross up at considerably greater cost.
It is clear that Departments recognise that the Government's £8,000 is inadequate. Obviously, the Treasury is aware of that fact. Industry feels very strongly about the matter—I have in mind the Confederation of British Industry, the Engineering Employers Federation and many other organisations. This is a last chance for the Government at least to provide a little more time before implementation of their proposal.

Mr. Dorrell: The right hon. Gentleman has made it clear that he favours a system that encourages flexibility where it is necessary for a business to move its operations. He agrees that unnecessary obstacles should not be put in the way of such mobility. I agree. It is important that the system be sufficiently flexible to facilitate mobility where it is clearly in an employer's interests to move an activity from one part of the country to another. But that is rather


different from the notion that mobility is a public good, that employers should receive tax treatment to encourage them to make some of their activities mobile. When an employer decides to move an activity from one area to another, he should not have to deal with unnecessary obstacles. However, the tax system should not in any way encourage such a decision. In this regard, the system and the public interest should be entirely neutral.
The changes that we are introducing remove what has amounted to a mild tax subsidy for a particular type of activity. The right hon. Gentleman has suggested that some people regard £25,000 removal packages as the norm. I simply do not believe that that is the normal cost of moving an individual from one part of the country to another. If it is the average, how is it that anybody ever moves house other than when paid by his employer to do so? Hon. Members ought to bring their critical faculties to bear on questions that we debate. Representations from interested groups to the effect that the average removal cost is £25,000 should be subjected to critical analysis. If they were analysed critically, they would be found to be wanting. The right hon. Gentleman asked me about grossing up in the case of public sector employees. That is not unknown, although we examine cases critically. When grossing up takes place, whether in this or in any other context, it is for Departments to decide what they need to do within the resources available to them. My right hon. Friend the Chief Secretary made the position very clear in the Standing Committee: he said that he would not entertain a suggestion that extra resources should flow to a Department that wanted to move people and to pay individuals' tax associated with the removal. Indeed, this flows from the policy stance that the Government have consistently adopted in respect of grossing up in the case of civil servants' tax bills.

Mr. Beith: I accept that no additional resources will be provided to enable Departments to gross up, but I should like to ask the Financial Secretary to confirm that Departments are examining, or have had to examine, relocation packages of more than £8,000, for which grossing up must be considered.

Mr. Dorrell: If a Department chose to gross up, it would be because it had decided that it needed to make a payment to a civil servant in respect of a removal in excess of £8,000. It is not a question whether the figure in excess of £8,000 includes an amount that is properly defined as betterment and, therefore, properly taxable. Spending Departments make payments to civil servants all the time, which are subject to tax. The question is not whether the payment is exceptional but whether it should be subject to tax. Against that background, we recognise that in order to move civil servants, or to encourage people in other walks of life to move, grossing up payments will be made. The principle is that the payment includes an element of betterment which is properly subjected to income tax. That principle underlies the provisions.
The Government have tabled what we believe are sensible proposals for transition. I cannot commend the amendment. The House should be aware that its practical effect would be not to extend the transition period but to abolish it. The Government have already withdrawn the extra statutory concessions with effect from 5 April this

year. which were the arrangements whereby removal expenses were previously exempt from tax. It is only by allowing the Bill to be passed in its present form that the transitional provisions would reach the statute book. Although the right hon. Gentleman may have preferred a longer transitional period, I hope that he will recognise that the effect of the amendment would be not to lengthen but to abolish the transitional arrangements proposed by the Government. Against that background, I hope that he will feel able to withdraw the amendment.

Mr. Beith: I do not accept the Minister's technical argument. We know that the matter proceeded on the basis that the extra statutory concession was withdrawn after a decision by Ministers. The extra statutory concession could have been used and could still be used as a vehicle for concession.
I do not accept the Minister's rather cavalier approach to grossing up. In this context, as in most others, grossing up is a device to ensure that what the employee and the employer—in this case, the employer being the Government—think might reasonably be a tax-free payment is still treated as if it were a tax-free payment and that the sum that the person involved receives in his hand is the same as if the payment had been tax free. It is a device, and one that should not be commended by the Treasury. The fact that the Treasury commends it suggests that the Treasury recognises internally that it has gone too far in setting the £8,000 limit.
For the Minister to argue that the issue should be dealt with in a tax-neutral way, and that it is wrong to treat relocation as a public good and therefore to allow any sort of concession, is an argument against having even a £8,000 limit. The logic of his case is that there should be no concession at all.
Ministers should be cautious about using the public good argument in matters of mobility. As they are transported to work in their chauffeur-driven cars on journeys on which they pay no tax, unlike other people, I hope that they will recline in their leather-covered seats—if they qualify for cars that have such seats—and ask themselves whether there is really any public good in their journeys being tax free. They should realise that other people have been told by their employers that if they want to keep their jobs they must move to the other end of the country, when the most that employers can put together to make such a move feasible, and without their paying tax, is £8,000. Otherwise, all the costs that employers find it necessary to subsidise, such as the cost of keeping two houses going until one can be sold, will be treated as a taxable benefit and the person involved will be taxed on it. That is not reasonable, and it is a perfectly sound argument for carrying the protest to a vote.

Question put, That the amendment be made:—

The House divided: Ayes 38, Noes 300.

Division No. 329]
[6.13 pm


AYES


Alton, David
Connarty, Michael


Ashdown, Rt Hon Paddy
Corbyn, Jeremy


Barnes, Harry
Cryer, Bob


Berth, Rt Hon A. J.
Ewing, Mrs Margaret


Bennett, Andrew F.
Graham, Thomas


Bruce, Malcolm (Gordon)
Harvey, Nick


Campbell, Menzies (Fife NE)
Hoey, Kate


Campbell, Ronnie (Blyth V)
Hughes, Simon (Southwark)


Canavan, Dennis
Johnston, Sir Russell


Carlile, Alexander (Montgomry)
Jones, Ieuan Wyn (Ynys Mòn)






Jones, Nigel (Cheltenham)
Salmond, Alex


Kennedy, Charles (Ross,C&S)
Sheldon, Rt Hon Robert


Llwyd, Elfyn
Skinner, Dennis


Loyden, Eddie
Steel, Rt Hon Sir David


Lynne, Ms Liz
Steinberg, Gerry


Macdonald, Calum
Welsh, Andrew


Mahon, Alice
Wigley, Dafydd


Marshall, Jim (Leicester, S)



Martlew, Eric
Tellers for the Ayes:


Michie, Mrs Ray (Argyll Bute)
Mr. Don Foster and Mr. Archy Kirkwood.


Rendel, David





NOES


Ainsworth, Peter (East Surrey)
Davis, David (Boothferry)


Aitken, Jonathan
Day, Stephen


Alexander, Richard
Deva, Nirj Joseph


Alison, Rt Hon Michael (Selby)
Devlin, Tim


Allason, Rupert (Torbay)
Dickens, Geoffrey


Amess, David
Dorrell, Stephen


Ancram, Michael
Douglas-Hamilton, Lord James


Arbuthnot, James
Dover, Den


Arnold, Jacques (Gravesham)
Duncan, Alan


Arnold, Sir Thomas (Hazel Grv)
Duncan-Smith, Iain


Ashby, David
Dunn, Bob


Aspinwall, Jack
Durant, Sir Anthony


Atkins, Robert
Dykes, Hugh


Atkinson, David (Bour'mouth E)
Eggar, Tim


Atkinson, Peter (Hexham)
Elletson, Harold


Baker, Nicholas (Dorset North)
Emery, Rt Hon Sir Peter


Baldry, Tony
Evans, David (Welwyn Hatfield)


Banks, Matthew (Southport)
Evans, Jonathan (Brecon)


Banks, Robert (Harrogate)
Evans, Nigel (Ribble Valley)


Batiste, Spencer
Evans, Roger (Monmouth)


Bellingham, Henry
Evennett, David


Bendall, Vivian
Faber, David


Beresford, Sir Paul
Fabricant, Michael


Biffen, Rt Hon John
Fairbairn, Sir Nicholas


Blackburn, Dr John G.
Fenner, Dame Peggy


Body, Sir Richard
Field, Barry (Isle of Wight)


Bonsor, Sir Nicholas
Fishburn, Dudley


Booth, Hartley
Forman, Nigel


Boswell, Tim
Forsyth, Michael (Stirling)


Bottomley, Rt Hon Virginia
Forsythe, Clifford (Antrim S)


Bowden, Andrew
Forth, Eric


Bowis, John
Fowler, Rt Hon Sir Norman


Boyson, Rt Hon Sir Rhodes
Fox, Dr Liam (Woodspring)


Brandreth, Gyles
Fox, Sir Marcus (Shipley)


Brazier, Julian
Freeman, Rt Hon Roger


Bright, Graham
French, Douglas


Brooke, Rt Hon Peter
Fry, Peter


Brown, M. (Brigg & Cl'thorpes)
Gale, Roger


Browning, Mrs. Angela
Gardiner, Sir George


Bruce, Ian (S Dorset)
Garnier, Edward


Budgen, Nicholas
Gill, Christopher


Burns, Simon
Gillan, Cheryl


Burt, Alistair
Goodlad, Rt Hon Alastair


Butcher, John
Goodson-Wickes, Dr Charles


Butler, Peter
Gorman, Mrs Teresa


Carlisle, Kenneth (Lincoln)
Gorst, John


Carrington, Matthew
Grant, Sir Anthony (Cambs SW)


Cash, William
Greenway, John (Ryedale)


Channon, Rt Hon Paul
Griffiths, Peter (Portsmouth, N)


Chapman, Sydney
Grylls, Sir Michael


Churchill, Mr
Gummer, Rt Hon John Selwyn


Clappison, James
Hague, William


Clark, Dr Michael (Rochford)
Hamilton, Rt Hon Archie (Epsom)


Clarke, Rt Hon Kenneth (Ruclif)
Hamilton, Neil (Tatton)


Clifton-Brown, Geoffrey
Hampson, Dr Keith


Coe, Sebastian
Hanley, Jeremy


Colvin, Michael
Hannam, Sir John


Congdon, David
Hargreaves, Andrew


Conway, Derek
Harris, David


Coombs, Anthony (Wyre For'st)
Haselhurst, Alan


Coombs, Simon (Swindon)
Hawkins, Nick


Cope, Rt Hon Sir John
Hawksley, Warren


Couchman, James
Hayes, Jerry


Cran, James
Heathcoat-Amory, David


Currie, Mrs Edwina (S D'by'ire)
Hendry, Charles


Curry, David (Skipton & Ripon)
Hicks, Robert


Davies, Quentin (Stamford)
Higgins, Rt Hon Sir Terence L.





Hill, James (Southampton Test)
Pickles, Eric


Hogg, Rt Hon Douglas (G'tham)
Porter, Barry (Wirral S)


Horam, John
Porter, David (Waveney)


Hordern, Rt Hon Sir Peter
Portillo, Rt Hon Michael


Howarth, Alan (Strat'rd-on-A)
Powell, William (Corby)


Howell, Rt Hon David (G'dford)
Redwood, Rt Hon John


Howell, Sir Ralph (N Norfolk)
Renton, Rt Hon Tim


Hunt, Sir John (Ravensbourne)
Richards, Rod


Hunter, Andrew
Riddick, Graham


Hurd, Rt Hon Douglas
Rifkind, Rt Hon. Malcolm


Jack, Michael
Robathan, Andrew


Jackson, Robert (Wantage)
Roberts, Rt Hon Sir Wyn


Jenkin, Bernard
Robertson, Raymond (Ab'd'n S)


Jessel, Toby
Robinson, Mark (Somerton)


Johnson Smith, Sir Geoffrey
Roe, Mrs Marion (Broxbourne)


Jones, Gwilym (Cardiff N)
Ross, William (E Londonderry)


Jones, Robert B. (W Hertfdshr)
Rowe, Andrew (Mid Kent)


Key, Robert
Rumbold, Rt Hon Dame Angela


Kilfedder, Sir James
Ryder, Rt Hon Richard


King, Rt Hon Tom
Sackville, Tom


Knapman, Roger
Scott, Rt Hon Nicholas


Knight, Mrs Angela (Erewash)
Shaw, David (Dover)


Knight, Greg (Derby N)
Shaw, Sir Giles (Pudsey)


Kynoch, George (Kincardine)
Shepherd, Colin (Hereford)


Lait, Mrs Jacqui
Shepherd, Richard (Aldridge)


Lamont, Rt Hon Norman
Shersby, Michael


Lang, Rt Hon Ian
Sims, Roger


Lawrence, Sir Ivan
Skeet, Sir Trevor


Legg, Barry
Smith, Tim (Beaconsfield)


Lennox-Boyd, Mark
Speed, Sir Keith


Lester, Jim (Broxtowe)
Spencer, Sir Derek


Lidington, David
Spicer, Sir James (W Dorset)


Lightbown, David
Spicer, Michael (S Worcs)


Lilley, Rt Hon Peter
Spink, Dr Robert


Lloyd, Peter (Fareham)
Spring, Richard


Luff, Peter
Sproat, Iain


Lyell, Rt Hon Sir Nicholas
Squire, Robin (Hornchurch)


MacGregor, Rt Hon John
Stanley, Rt Hon Sir John


MacKay, Andrew
Steen, Anthony


Maclean, David
Stephen, Michael


McLoughlin, Patrick
Stern, Michael


McNair-Wilson, Sir Patrick
Stewart, Allan


Madel, David
Streeter, Gary


Maitland, Lady Olga
Sumberg, David


Malone, Gerald
Sweeney, Walter


Mans, Keith
Sykes, John


Marland, Paul
Tapsell, Sir Peter


Marlow, Tony
Taylor, Ian (Esher)


Marshall, John (Hendon S)
Taylor, Rt Hon John D. (Strgfd)


Marshall, Sir Michael (Arundel)
Taylor, John M. (Solihull)


Martin, David (Portsmouth S)
Taylor, Sir Teddy (Southend, E)


Mates, Michael
Temple-Morris, Peter


Mawhinney, Dr Brian
Thomason, Roy


Mayhew, Rt Hon Sir Patrick
Thompson, Sir Donald (C'er V)


Mellor, Rt Hon David
Thompson, Patrick (Norwich N)


Merchant, Piers
Thornton, Sir Malcolm


Milligan. Stephen
Thurnham, Peter


Mills, Iain
Townsend, Cyril D. (Bexl'yh'th)


Mitchell, Andrew (Gedling)
Tracey, Richard


Mitchell, Sir David (Hants NW)
Tredinnick, David


Moate, Sir Roger
Trend, Michael


Monro, Sir Hector
Trotter, Neville


Montgomery, Sir Fergus
Twinn, Dr Ian


Moss, Malcolm
Vaughan, Sir Gerard


Needham, Richard
Viggers, Peter


Neubert, Sir Michael
Waldegrave, Rt Hon William


Newton, Rt Hon Tony
Walden, George


Nicholls, Patrick
Walker, A. Cecil (Belfast N)


Nicholson, David (Taunton)
Waller, Gary


Nicholson, Emma (Devon West)
Ward, John


Norris, Steve
Wardle, Charles (Bexhill)


Onslow, Rt Hon Sir Cranley
Waterson, Nigel


Oppenheim, Phillip
Watts, John


Ottaway, Richard
Wells, Bowen


Page, Richard
Whitney, Ray


Paice, James
Whittingdale, John


Patnick, Irvine
Widdecombe, Ann


Pattie, Rt Hon Sir Geoffrey
Wiggin, Sir Jerry


Pawsey, James
Wilkinson, John


Peacock, Mrs Elizabeth
Willetts, David






Wilshire, David
Yeo, Tim


Winterton, Mrs Ann (Congleton)



Winterton, Nicholas (Macc'f'ld)
Tellers for the Noes:


Wolfson, Mark
Mr. Timothy Kirkhope and Mr. Robert G. Hughes.


Wood, Timothy

Question accordingly negatived.

Schedule 20

LLOYD'S UNDERWRITERS: SPECIAL RESERVE FUNDS

Amendment made: No. 6, in page 291, line 42, at end insert—

'(3) The arrangements must be such as to secure that, except as required or permitted (whether expressly or by necessary implication) by this Part or Part II of this Schedule, no payments shall be made into or out of the member's special reserve fund.'.—[Mr. MacKay.]

Amendment proposed: No. 21, in page 294, leave out lines 27 to 29.

Question put, That the amendment be made:—

The House divided: Ayes 236, Noes 312.

Division No. 330]
[6.27 pm


AYES


Abbott, Ms Diane
Cox, Tom


Adams, Mrs Irene
Cryer, Bob


Ainger, Nick
Cummings, John


Ainsworth, Robert (Cov'try NE)
Cunliffe, Lawrence


Allen, Graham
Cunningham, Jim (Covy SE)


Alton, David
Cunningham, Rt Hon Dr John


Anderson, Donald (Swansea E)
Dalyell, Tam


Anderson, Ms Janet (Ros'dale)
Darling, Alistair


Armstrong, Hilary
Davidson, Ian


Austin-Walker, John
Davies, Bryan (Oldham C'tral)


Banks, Tony (Newham NW)
Davies, Rt Hon Denzil (Llanelli)


Barnes, Harry
Davies, Ron (Caerphilly)


Barron, Kevin
Davis, Terry (B'ham, H'dge H'I)


Battle, John
Dewar, Donald


Bayley, Hugh
Dixon, Don


Beckett, Rt Hon Margaret
Dobson, Frank


Bell, Stuart
Dowd, Jim


Benn, Rt Hon Tony
Dunnachie, Jimmy


Bennett, Andrew F.
Dunwoody, Mrs Gwyneth


Berry, Dr. Roger
Eagle, Ms Angela


Betts, Clive
Eastham, Ken


Blair, Tony
Enright, Derek


Boateng, Paul
Etherington, Bill


Boyce, Jimmy
Evans, John (St Helens N)


Boyes, Roland
Ewing, Mrs Margaret


Bradley, Keith
Fatchett, Derek


Bray, Dr Jeremy
Faulds, Andrew


Brown, Gordon (Dunfermline E)
Field, Frank (Birkenhead)


Brown, N. (N'c'tle upon Tyne E)
Fisher, Mark


Burden, Richard
Flynn, Paul


Byers, Stephen
Foster, Rt Hon Derek


Caborn, Richard
Foulkes, George


Callaghan, Jim
Fraser, John


Campbell, Mrs Anne (C'bridge)
Fyfe, Maria


Campbell, Ronnie (Blyth V)
Galloway, George


Campbell-Savours, D. N.
Gapes, Mike


Canavan, Dennis
Garrett, John


Cann, Jamie
George, Bruce


Chisholm, Malcolm
Gerrard, Neil


Clapham, Michael
Godman, Dr Norman A.


Clark, Dr David (South Shields)
Godsiff, Roger


Clarke, Eric (Midlothian)
Golding, Mrs Llin


Clarke, Tom (Monklands W)
Gordon, Mildred


Clelland, David
Gould, Bryan


Clwyd, Mrs Ann
Graham, Thomas


Coffey, Ann
Grant, Bernie (Tottenham)


Connarty, Michael
Griffiths, Nigel (Edinburgh S)


Cook, Frank (Stockton N)
Griffiths, Win (Bridgend)


Cook, Robin (Livingston)
Grocott, Bruce


Corbett, Robin
Gunnell, John


Corbyn, Jeremy
Hain, Peter


Corston, Ms Jean
Hall, Mike


Cousins, Jim
Hanson, David





Hardy, Peter
Mowlam, Marjorie


Harman, Ms Harriet
Mudie, George


Heppell, John
Mullin, Chris


Hill, Keith (Streatham)
Murphy, Paul


Hinchliffe, David
Oakes, Rt Hon Gordon


Hoey, Kate
O'Brien, Michael (N W'kshire)


Hogg, Norman (Cumbernauld)
O'Brien, William (Normanton)


Home Robertson, John
O'Hara, Edward


Hood, Jimmy
Olner, William


Hoon, Geoffrey
Patchett, Terry


Howarth, George (Knowsley N)
Pendry, Tom


Howells, Dr. Kim (Pontypridd)
Pickthall, Colin


Hoyle, Doug
Pike, Peter L.


Hughes, Kevin (Doncaster N)
Powell, Ray (Ogmore)


Hughes, Robert (Aberdeen N)
Prentice, Ms Bridget (Lew'm E)


Hughes, Roy (Newport E)
Prentice, Gordon (Pendle)


Hutton, John
Prescott, John


Illsley, Eric
Primarolo, Dawn


Ingram, Adam
Purchase, Ken


Jackson, Glenda (H'stead)
Quin, Ms Joyce


Jackson, Helen (Shef'ld, H)
Radice, Giles


Jamieson, David
Redmond, Martin


Janner, Greville
Robertson, George (Hamilton)


Jones, Barry (Alyn and D'side)
Robinson, Geoffrey (Co'try NW)


Jones, Lynne (B'ham S O)
Roche, Mrs. Barbara


Jones, Martyn (Clwyd, SW)
Rogers, Allan


Jones, Nigel (Cheltenham)
Rooker, Jeff


Jowell, Tessa
Rooney, Terry


Kennedy, Jane (Lpool Brdgn)
Ross, Ernie (Dundee W)


Khabra, Piara S.
Rowlands, Ted


Kilfoyle, Peter
Salmond, Alex


Kinnock, Rt Hon Neil (Islwyn)
Sheerman, Barry


Kirkwood, Archy
Sheldon, Rt Hon Robert


Leighton, Ron
Shore, Rt Hon Peter


Lestor, Joan (Eccles)
Short, Clare


Livingstone, Ken
Simpson, Alan


Lloyd, Tony (Stretford)
Skinner, Dennis


Llwyd, Elfyn
Smith, Andrew (Oxford E)


Loyden, Eddie
Smith, C. (Isl'ton S & F'sbury)


McAllion, John
Smith, Rt Hon John (M'kl'ds E)


McAvoy, Thomas
Snape, Peter


McCartney, Ian
Soley, Clive


Macdonald, Calum
Spearing, Nigel


McKelvey, William
Spellar, John


Mackinlay, Andrew
Steinberg, Gerry


McLeish, Henry
Stevenson, George


McNamara, Kevin
Strang, Dr. Gavin


Madden, Max
Straw, Jack


Mahon, Alice
Tipping, Paddy


Mandelson, Peter
Vaz, Keith


Marek, Dr John
Walker, Rt Hon Sir Harold


Marshall, David (Shettleston)
Walley, Joan


Marshall, Jim (Leicester, S)
Wareing, Robert N


Martlew, Eric
Welsh, Andrew


Maxton, John
Wigley, Dafydd


Meacher, Michael
Williams, Rt Hon Alan (Sw'n W)


Meale, Alan
Williams, Alan W (Carmarthen)


Michie, Bill (Sheffield Heeley)
Winnick, David


Milburn, Alan
Wise, Audrey


Miller, Andrew
Worthington, Tony


Mitchell, Austin (Gt Grimsby)
Wray, Jimmy


Moonie, Dr Lewis
Wright, Dr Tony


Morgan, Rhodri
Young, David (Bolton SE)


Morley, Elliot



Morris, Rt Hon A. (Wy'nshawe)
Tellers for the Ayes:


Morris, Estelle (B'ham Yardley)
Mr. Gordon McMaster and Mr. Dennis Turner.


Morris, Rt Hon J. (Aberavon)





NOES


Ainsworth, Peter (East Surrey)
Ashdown, Rt Hon Paddy


Aitken, Jonathan
Aspinwall, Jack


Alexander, Richard
Atkins, Robert


Alison, Rt Hon Michael (Selby)
Atkinson, David (Bour'mouth E)


Allason, Rupert (Torbay)
Atkinson, Peter (Hexham)


Amess, David
Baker, Nicholas (Dorset North)


Ancram, Michael
Baldry, Tony


Arbuthnot, James
Banks, Matthew (Southport)


Arnold, Jacques (Gravesham)
Banks, Robert (Harrogate)


Arnold, Sir Thomas (Hazel Grv)
Batiste, Spencer


Ashby, David
Beith, Rt Hon A. J.






Bellingham, Henry
Fowler, Rt Hon Sir Norman


Bendall, Vivian
Fox, Dr Liam (Woodspring)


Beresford, Sir Paul
Fox, Sir Marcus (Shipley)


Biffen, Rt Hon John
Freeman, Rt Hon Roger


Blackburn, Dr John G.
French, Douglas


Body, Sir Richard
Fry, Peter


Bonsor, Sir Nicholas
Gale, Roger


Booth, Hartley
Gardiner, Sir George


Boswell, Tim
Garnier, Edward


Bottomley, Peter (Eltham)
Gill, Christopher


Bottomley, Rt Hon Virginia
Gillan, Cheryl


Bowden, Andrew
Goodlad, Rt Hon Alastair


Bowis, John
Goodson-Wickes, Dr Charles


Boyson, Rt Hon Sir Rhodes
Gorman, Mrs Teresa


Brandreth, Gyles
Gorst, John


Brazier, Julian
Grant, Sir Anthony (Cambs SW)


Bright, Graham
Greenway, John (Ryedale)


Brooke, Rt Hon Peter
Griffiths, Peter (Portsmouth, N)


Brown, M. (Brigg & Cl'thorpes)
Grylls, Sir Michael


Browning, Mrs. Angela
Gummer, Rt Hon John Selwyn


Bruce, Ian (S Dorset)
Hague, William


Bruce, Malcolm (Gordon)
Hamilton, Rt Hon Archie (Epsom)


Budgen, Nicholas
Hamilton, Neil (Tatton)


Burns, Simon
Hampson, Dr Keith


Burt, Alistair
Hanley, Jeremy


Butcher, John
Hannam, Sir John


Butler, Peter
Hargreaves, Andrew


Campbell, Menzies (Fife NE)
Harris, David


Carlile, Alexander (Montgomry)
Harvey, Nick


Carlisle, Kenneth (Lincoln)
Haselhurst, Alan


Carrington, Matthew
Hawkins, Nick


Cash, William
Hawksley, Warren


Channon, Rt Hon Paul
Hayes, Jerry


Churchill, Mr
Heathcoat-Amory, David


Clappison, James
Hendry, Charles


Clark, Dr Michael (Rochford)
Hicks, Robert


Clarke, Rt Hon Kenneth (Ruclif)
Higgins, Rt Hon Sir Terence L.


Clifton-Brown, Geoffrey
Hill, James (Southampton Test)


Coe, Sebastian
Hogg, Rt Hon Douglas (G'tham)


Colvin, Michael
Horam, John


Congdon, David
Hordern, Rt Hon Sir Peter


Conway, Derek
Howarth, Alan (Strat'rd-on-A)


Coombs, Anthony (Wyre For'st)
Howell, Rt Hon David (G'dford)


Coombs, Simon (Swindon)
Howell, Sir Ralph (N Norfolk)


Cope, Rt Hon Sir John
Hughes Robert G. (Harrow W)


Couchman, James
Hughes, Simon (Southwark)


Cran, James
Hunt, Sir John (Ravensbourne)


Currie, Mrs Edwina (S D'by'ire)
Hunter, Andrew


Curry, David (Skipton & Ripon)
Jack, Michael


Davies, Quentin (Stamford)
Jackson, Robert (Wantage)


Davis, David (Boothferry)
Jenkin, Bernard


Day, Stephen
Jessel, Toby


Deva, Nirj Joseph
Johnson Smith, Sir Geoffrey


Devlin, Tim
Johnston, Sir Russell


Dorrell, Stephen
Jones, Gwilym (Cardiff N)


Dover, Den
Jones, Robert B. (W Hertfdshr)


Duncan, Alan
Kennedy, Charles (Ross,C&S)


Duncan-Smith, Iain
Key, Robert


Dunn, Bob
Kilfedder, Sir James


Durant, Sir Anthony
King, Rt Hon Tom


Dykes, Hugh
Kirkhope, Timothy


Eggar, Tim
Knapman, Roger


Elletson, Harold
Knight, Mrs Angela (Erewash)


Emery, Rt Hon Sir Peter
Knight, Greg (Derby N)


Evans, David (Welwyn Hatfield)
Kynoch, George (Kincardine)


Evans, Jonathan (Brecon)
Lait, Mrs Jacqui


Evans, Nigel (Ribble Valley)
Lamont, Rt Hon Norman


Evans, Roger (Monmouth)
Lang, Rt Hon Ian


Evennett, David
Lawrence, Sir Ivan


Faber, David
Legg, Barry


Fabricant, Michael
Lennox-Boyd, Mark


Fairbairn, Sir Nicholas
Lidington, David


Fenner, Dame Peggy
Lilley, Rt Hon Peter


Field, Barry (Isle of Wight)
Lloyd, Peter (Fareham)


Fishburn, Dudley
Luff, Peter


Forman, Nigel
Lyell, Rt Hon Sir Nicholas


Forsyth, Michael (Stirling)
Lynne, Ms Liz


Forsythe, Clifford (Antrim S)
MacGregor, Rt Hon John


Forth, Eric
MacKay, Andrew


Foster, Don (Bath)
Maclean, David





McLoughlin, Patrick
Shersby, Michael


McNair-Wilson, Sir Patrick
Sims, Roger


Madel, David
Skeet, Sir Trevor


Maitland, Lady Olga
Smith, Tim (Beaconsfield)


Malone, Gerald
Speed, Sir Keith


Mans, Keith
Spencer, Sir Derek


Marland, Paul
Spicer, Sir James (W Dorset)


Marlow, Tony
Spicer, Michael (S Worcs)


Marshall, John (Hendon S)
Spink, Dr Robert


Marshall, Sir Michael (Arundel)
Spring, Richard


Martin, David (Portsmouth S)
Sproat, Iain


Mates, Michael
Squire, Robin (Hornchurch)


Mawhinney, Dr Brian
Stanley, Rt Hon Sir John


Mayhew, Rt Hon Sir Patrick
Steel, Rt Hon Sir David


Mellor, Rt Hon David
Steen, Anthony


Merchant, Piers
Stephen, Michael


Michie, Mrs Ray (Argyll Bute)
Stern, Michael


Milligan, Stephen
Stewart, Allan


Mills, Iain
Streeter, Gary


Mitchell, Andrew (Gedling)
Sumberg, David


Mitchell, Sir David (Hants NW)
Sweeney, Walter


Moate, Sir Roger
Sykes, John


Monro, Sir Hector
Tapsell, Sir Peter


Montgomery, Sir Fergus
Taylor, Ian (Esher)


Moss, Malcolm
Taylor, Rt Hon John D. (Strgfd)


Needham, Richard
Taylor, John M. (Solihull)


Neubert, Sir Michael
Taylor, Sir Teddy (Southend, E)


Newton, Rt Hon Tony
Temple-Morris, Peter


Nicholls, Patrick
Thomason, Roy


Nicholson, David (Taunton)
Thompson, Sir Donald (C'er V)


Nicholson, Emma (Devon West)
Thompson, Patrick (Norwich N)


Norris, Steve
Thornton, Sir Malcolm


Onslow, Rt Hon Sir Cranley
Thurnham, Peter


Oppenheim, Phillip
Townsend, Cyril D. (Bexl'yh'th)


Ottaway, Richard
Tracey, Richard


Page, Richard
Tredinnick, David


Paice, James
Trend, Michael


Patnick, Irvine
Trotter, Neville


Pattie, Rt Hon Sir Geoffrey
Twinn, Dr Ian


Pawsey, James
Tyler, Paul


Peacock, Mrs Elizabeth
Vaughan, Sir Gerard


Pickles, Eric
Viggers, Peter


Porter, Barry (Wirral S)
Waldegrave, Rt Hon William


Porter, David (Waveney)
Walden, George


Portillo, Rt Hon Michael
Walker, A. Cecil (Belfast N)


Powell, William (Corby)
Waller, Gary


Redwood, Rt Hon John
Ward, John


Rendel, David
Wardle, Charles (Bexhill)


Renton, Rt Hon Tim
Waterson, Nigel


Richards, Rod
Watts, John


Riddick, Graham
Wells, Bowen


Rifkind, Rt Hon. Malcolm
Whitney, Ray


Robathan, Andrew
Whittingdale, John


Roberts, Rt Hon Sir Wyn
Widdecombe, Ann


Robertson, Raymond (Ab'd'n S)
Wiggin, Sir Jerry


Robinson, Mark (Somerton)
Wilkinson, John


Roe, Mrs Marion (Broxbourne)
Willetts, David


Ross, William (E Londonderry)
Wilshire, David


Rowe, Andrew (Mid Kent)
Winterton, Mrs Ann (Congleton)


Rumbold, Rt Hon Dame Angela
Winterton, Nicholas (Macc'f'ld)


Ryder, Rt Hon Richard
Wolfson, Mark


Sackville, Tom
Wood, Timothy


Sainsbury, Rt Hon Tim
Yeo, Tim


Scott, Rt Hon Nicholas



Shaw, David (Dover)
Tellers for the Noes:


Shaw, Sir Giles (Pudsey)
Mr. David Lightbown and Mr. Sydney Chapman.


Shepherd, Colin (Hereford)

Question accordingly negatived.

Order for Third Reading read.

The Chief Secretary to the Treasury (Mr. Michael Portillo): I beg to move, That the Bill be now read the Third time.
It is some time since the Budget. We have been involved since then in detailed discussion of the Bill in Committee, and it is perhaps timely to set the Finance (No. 2) Bill once more in its strategic context.
Recently, there has been a lot of good news about the economy. We have had growth in the gross domestic product for the past three quarters and encouraging statistics on inflation and industrial production. We have seen the latest figures for retail sales rising by 3 per cent., and there has been good performance on exports. Business optimism is at its highest level for 10 years and today's figures for manufacturing output show that it rose by 1·8 per cent. in May. In the first five months of the year, manufacturing output recovered by more than half the total loss it sustained during the recession. In the past four months, even the figures for unemployment have been encouraging, very much against the expectations of many commentators.
The Organisation for Economic Co-operation and Development forecasts that Britain will have the fastest growth of any major European Community country in 1993, and that that will be repeated in 1994. Those are all encouraging statistics. The principal threat to our economic prospects now comes from the size of our fiscal deficit.
The threat posed by the size of the deficit is not removed by the series of good figures that we have had, although recovery is now clearly established across a range of indicators in the economy. Part of our deficit is caused by the cycle, by reduced receipts to the Government, and by extra money that the Government have to pay out in benefits to the unemployed. None the less, the Government have made provision in their new public spending plans to count separately those elements that are due to the cycle, and to focus upon the new control total.
Whatever the extent of the cyclical elements within the present fiscal deficit, to say that some elements are cyclical is not the same as saying that they will unwind automatically at the end of the recession. If one went to one's bank manager and said that one's large overdraft did not matter because it was merely cyclical, the bank manager would not be impressed, and would not let one off paying the debt interest.
That is the position in which the Government find themselves. The burden of debt interest is rising sharply and, over the next few years, it will rise by £10 billion a year. That is money that cannot be devoted to the public spending programmes that many of my hon. Friends and other hon. Members might regard as desirable.
There are important reasons why the Government should maintain control of the public sector deficit. I do not believe that the people of this country who have had to make great sacrifices during the recession, or those in business who have had to retrench during the recession, have any desire to see their Government living beyond their means on a sustained basis, and there can be no moral case for doing so.
That is why the Government have developed a medium-term strategy for dealing with our public sector borrowing requirement. We have also embarked on establishing a rhythm of good decision making, which is a vital ingredient for the restoration of confidence.
The autumn statement was made in November by my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont). It set out for three years ahead the Government's public spending plans. In March this year, the Budget set taxation policy in a medium-term context, setting out the tax increases that will occur over the next three years.
That has been translated into the Finance (No. 2) Bill, consideration of which we are completing today. I believe that the rhythm of decision making—of decisions well thought out, well presented and stuck to—is a vital ingredient in restoring confidence. Its effects can now be seen in growing confidence, in the business optimism survey, which I have already quoted, which is the best for 10 years, and in the performance of the markets, with recent pressure on the pound being, if anything, upward rather than downward.

Mr. Betts: Of the £50 billion deficit this year, will the Chief Secretary tell the House how much he regards as cyclical, which will unwind naturally as part of any recovery, and how much is structural and will not unwind? Does he accept that there could be considerable damage to the unwinding of the cyclical element if the Government acted at the wrong time in the cycle to tackle the structural element?

Mr. Portillo: I should make it clear that to say that something is cyclical and that it will unwind is not the same thing. For example, the increase in the burden of debt interest is clearly cyclical, inasmuch as it is caused by the fact that the Government are borrowing more because they are spending more and receiving less. The fact that we have made those extra borrowings will not lead, at the end of the recession and when recovery is well under way, to our being let off the debt interest payment. The debt interest payment will still have to be made on the borrowings that have been incurred. So that which is cyclical and that which will unwind are not the same.
That is why, although one could make guesses about the cyclical element within the PSBR, the Government are rightly wary of pursuing that argument too far, because they recognise that not all the elements will unwind at the end of the period.
The Government are headed in the direction of reducing the public sector borrowing requirement by three routes: growth in the economy, which will help to reduce the cyclical elements to which the hon. Member for Sheffield, Attercliffe (Mr. Betts) referred and which will mean that there will be less to spend on social security and that the Government's receipts will increase; the constraint of public spending; and the tax rises announced in the Budget.
I recognise that some of the measures in the Bill are unpopular with my hon. Friends and in the country. That is why I should like to thank my hon. Friends for the support that they have given to the measures in the Bill. It is in no way satisfying to me to have to propose tax increases to my hon. Friends, but I hope that at least it has dealt with the myth that, in some way, to raise taxes is an easy option, whereas to constrain public spending is not.
Both constraining public spending and raising taxes are extremely difficult. My hon. Friends have been willing to support the difficult measures proposed in the Bill because they value the objective of achieving, above all, sound public finances. They are committed to restoring the
Government's financies. They recognise that the Government must not live beyond their means, and that that is what is expected of us by the people we govern.
Fairness is extremely important in the package that we put together. My hon. Friends have found difficult the proposals to extend VAT to fuel and power. I remind them that we have taken care in the Budget and the Bill to ensure that the extra taxes that we have to raise fall proportionately across the various divisions of income.
In the full year of the effects of the Bill, we will be raising an extra £10·5 billion of revenue. Of that, only £2·3 billion comes from the extension of VAT to fuel and power. The money will also come from the changed taxation of dividends, the change in taxation for the married couples allowance for those on higher tax rates, changes in taxation on company cars and the different treatment of mortgage interest relief, again confined to 20 per cent., and therefore affecting in particular those people on higher rates of tax.
Therefore, I believe that we have produced a package that is fair to people across the income ranges and I think it has been recognised as such by independent commentators.

Ms Harriet Harman: Since the Chief Secretary says that fairness is important, can he tell the House, and in particular his hon. Friends whom he will ask to vote to impose VAT on gas and electricity, how much money he will put into the compensation scheme to ensure that it does not disadvantage the poor, the elderly and those with disabilities?

Mr. Portillo: No, I cannot give an exact answer. The appropriate time to make that announcement will be in the autumn. My right hon. Friend the Secretary of State for Social Security is under an obligation to make an uprating statement to the House in the autumn, and when he does so he will take into account all the factors which at the time affect his judgment about what the appropriate uprating should be. I do not believe that it is right to try to prejudice the decision that is best taken at that time.

Mr. Alex Salmond: The Chief Secretary said that there were three routes for controlling the Budget deficit—restraining spending, increasing taxes and growth. He did not give any idea of the proportions that he thought would be contributed by each of those avenues. Can he give us a broad-brush idea of, for example, how much of the PSBR he expects to be dealt with by increased growth?

Mr. Portillo: The present prospects for the course of the PSBR and all the assumptions on growth and on other matters are set out in the Red Book. They show a declining path for the PSBR over the next five years. If the hon. Gentleman wishes to study those assumptions, he will find them all set out. What can be answered with absolute precision is the contribution to be made from taxation, which is an extra £6·5 billion in 1994–95, and £10·5 billion in 1995–96.
The Government are concerned not just with borrowing, important though that is, but also with the level of public spending. That has now reached a level of around 45 per cent. of GDP. The Government believe that the burden imposed by public spending on the

wealth-creating sector should be kept to a minimum. If that burden is allowed to grow too much, it will choke off the wealth-creating sector.
We believe that those who create the wealth in our society should be left with the lion's share of that wealth. We do not believe that the state has a pre-emptive right to help itself to more than half of what is produced by the people of the country.
The Government are wary of the burden that is imposed by the state, and we have therefore now embarked upon a new public spending round. We confirmed, following last month's Cabinet meeting, that the new control total figures in cash that we intend to achieve for 1994–95 and 1995–96 are the same as those that were announced at the time of last year's autumn statement and which were confirmed in the Red Book, published at the time of the Budget.
The targets that we have set ourselves are challenging—perhaps more challenging than my hon. Friends realise. They assume virtually no growth in real terms, either between this year and next year or between next year and the year after.
Within the total of public spending that has been so restricted, important pressures have been set up by programmes that are demand-led. In particular, I think of education; many more students are predicted to go into higher education in the years ahead. There are also the demands from social security, which is far and away the largest public spending programme.
The task that faces us is to find ways of reducing the trend rate of growth of programmes. If public spending is limited as a total to zero growth in real terms, but some programmes within it, such as social security, are growing by 3 per cent. in real terms, that obviously sets up a problem. We must reduce the trend rate of growth of those programmes, and probably make savings in other programmes.
I have been gratified by the support that my hon. Friends have given to the Government's objectives for the control of public spending. Their support makes the task a great deal easier. I hope that, when we come to propose specific measures to the House, we shall find the same support for the specific measures which are necessary to deliver those totals which have the support of my hon. Friends. Public spending control is important, because it plays a vital part in establishing Britain's competitiveness.
During the 1980s, Britain's proportion of GDP that was taken up by public spending moved from close to and sometimes above the EC average to a level well below the EC average, and much closer. to the American average, although still some way above the Japanese average. That is still true today.
The amount of public spending within GDP is an important component in the competitiveness of this country. It has enabled us to run low rates of taxation that are attractive to investors and to people who want to do business, and has also provided good incentives to people in this country who are doing business. We forget the attraction of low rates of direct taxation at our peril.
The Bill is crafted to impose the minimum disincentive upon our economy, and to maintain incentives to help industry to keep costs low. Of all the recent statistics on the British economy, the improvement in competitiveness has been the most satisfying and perhaps the most important. We have seen productivity grow by 8 per cent. in the past year to its highest ever level. Unit labour costs have fallen


by about 3 per cent., whereas German unit labour costs rose last year by 10 per cent. The wage increases in British industry today are lower than at any time for 25 years.
I pay tribute to British management for many of those achievements. One would not expect productivity to rise during a recession. One would expect businesses to find it difficult to cut their costs as fast as they are losing orders. But British business has improved productivity to a record level and, as a consequence, we expect that competitiveness will improve by 20 per cent. in a single year. We also expect British business to improve its share of world trade for the first time in three decades.
Exports are at a record level, up by 6·5 per cent. on a year ago. Competitiveness should concern not only this country but the rest of the EC. The Community has been out-performed in economic terms by Japan in the 1960s, 1970s and 1980s. The EC was also out-performed by the United States in the 1980s. The prospect, I am afraid, is that the EC will continue to be outperformed by both the US and Japan.
That is why it is important to maintain competitiveness and protect incentives in the way that the Bill does. It is also important, of course, that we remain firmly outside the social chapter of the Maastricht treaty, which would drive up our costs to the highest levels in Europe, and would affect our competitiveness.

Mr. Beith: The Minister pays tribute to British management. What about the British workers? They, after all, have shown great flexibility and have adapted to new technologies. A fair proportion of their colleagues and friends have now found themselves out of work as part of the process of bringing about lower costs for some manufacturing companies.

Mr. Portillo: I agree that the costs of the recession have been felt by everyone in Britain. That is one of the reasons why the Government must not be the only institution in Britain not to feel the effects of the recession.
I recognise that immense costs have been paid by those who have become unemployed. I also recognise the flexibility of the British labour market, which is and will continue to be one of its great strengths in the years ahead. It may be too early to tell, but one of the reasons why the unemployment figures have turned may be the greater flexibility of the United Kingdom labour market. If so, I pay tribute to both management and to work force.
I also pay tribute, if I may, to Government policies, which have, in the face of opposition from the Opposition parties, created a more flexible and more responsive labour market, which has enabled Britain to be competitive and unemployment to fall.
I hope that unemployment falls more quickly, as the recovery comes upon the economy, than it did in the 1980s. All the strategies that I have talked about are clearly exemplified within the Finance Bill, and demonstrate the Government's clear medium-term policy for the British economy.
I am bound to ask myself, "What has been offered to us by the Opposition? What have they put up by way of reasonable alternatives during discussions on the Bill?" First of all, I turn to the hon. Member for Peckham (Ms Harman). Ideally, a Chief Secretary to the Treasury should be flinty-faced, stony-hearted and odious. I believe that I

fit the bill. But the shadow Chief Secretary also should be flinty-faced, stony-hearted and odious. To what extent does the hon. Lady fit the bill? Is she flinty-faced? No, she is kind and radiant-faced. Is she stony-hearted? No, she is open-hearted. She is generous to a fault. She wants to spend money on any good cause that is put her way. Those are not the natural instincts of a Chief Secretary.
Is the hon. Lady odious? Do Opposition spokesmen tremble over their pens when writing their speeches, worrying that they may inadvertently commit the Labour party to a new promise on public spending that has not been approved by the shadow Chief Secretary? I fear that they do not fear the hon. Lady. Indeed, I am afraid that they could not fear the hon. Lady. I am tempted to say that she has fragrance, and fragrance is not something which any Chief Secretary or shadow Chief Secretary should have.
My hon. Friends may protest that the hon. Member for Dunfermline, East (Mr. Brown) may appear better qualified for the job of shadow Chief Secretary. He is Grim Gordon, Gloomy Gordon, Glowering Gordon—indeed, anything other than Gay Gordon. He probably would make an admirable shadow Chief Secretary. Unfortunately, the hon. Gentleman is shadow Chancellor of the Exchequer, and it is incumbent upon him to come up with an economic policy. What have we had from the hon. Gentleman? He wishes to spend the receipts that are held by local authorities. He wishes, he says, to bring down unemployment to bring about a recovery. Both those aims demonstrate such complete economic illiteracy that I want to share it with the House.
If one were to spend the receipts of local authorities, which have after all been set aside against their debts, one would increase public borrowing and public spending. To say that one would be able to bring about recovery by reducing unemployment is nothing but a fudge. The House knows perfectly well that a recovery produced by the economic policies that we follow can reduce unemployment. It is not possible to reverse the process and say that one can reduce unemployment and thus bring about recovery.
The economy needs sound finances. It needs policies for sound finances. The hon. Member for Dunfermline, East offers sound-bite finances. His policies were described by the right hon. Member for Chesterfield (Mr. Benn) as sound bites strung together, and they do not constitute an economic policy. Unfortunately, that is all that the hon. Member for Dunfermline, East has to offer.
Moving up the scale, we come to the right hon. and learned Member for Monklands, East (Mr. Smith), the Leader of the Opposition. He is the man who stands at the Opposition Dispatch Box and amuses the House. He is the man who makes speeches about hotels falling off cliffs and the grand national not starting properly, blames that on the Government and gets a laugh. One would think that he was auditioning to be the host of "Clive Anderson Talks Back". He is supposed to be auditioning for the role of Prime Minister. It is an extremely sad reflection on him that he is unable to come up to scratch. All around the country—

Madam Deputy Speaker (Dame Janet Fookes): Order. I am sorry to sound like a spoilsport, but, before the right hon. Gentleman continues, I must ask what this has to do with the Third Reading of the Finance Bill.

Mr. Portillo: The connection with the Finance Bill, Madam Deputy Speaker, is that, during the passage of the Finance Bill, we had hoped to hear an exposition from the Opposition spokesmen about the Labour party's policies. Unfortunately, and to conclude this section, we have instead found a complete failure by the Opposition to put themselves forward as a reasonable Opposition and an alternative Government.
There is not a boardroom, factory floor or council estate in the country where any confidence is felt in the policies of the Opposition, even when people have read carefully the proceedings of the Finance Bill upstairs.

Mr. Robert Sheldon: So that the House can get him off the hook of that last passage, will the Chief Secretary now turn to serious matters and discuss the situation that will arise in the autumn when we will have the combined Budget? He has decided so much of the public expenditure that is settled for the next few years, much of which cannot be changed during the autumn Budget. What he can do in that Budget is raise taxation. He cannot adjust the balance between expenditure and revenue, because so much of the expenditure is already settled on.

Mr. Portillo: The right hon. Gentleman, by his tone, puts that forward as a criticism. The Government established a medium-term strategy for public spending, which is set out in the Finance Bill, and in all logic it will now bring together in a single statement both our plans for public spending—the details of how those totals are to be achieved—and our plans for taxation—any changes that may need to be made from the plans set out in the Finance Bill.
The right hon. Gentleman is criticising, apparently, the medium-term clarity that has been established by the Government. That clarity is, in my view, one of the great underlying strengths of our approach. That is also the view of the markets, which have shown their confidence over recent months.
Our economic strategy, as shown by the Bill, is clear. It extends beyond the three years covered by the public expenditure survey and beyond the years covered in the Bill. It clearly tells the nation what the Government want to achieve over the medium and long-term. We have a strategy for low inflation, and a clear medium-term framework to restore public finances. We have set fixed spending ceilings, above which we will not go. The Bill contains further measures for tackling the deficit in future.
We look forward to the unified Budget on which the right hon. Gentleman has just questioned me. In it, we will continue the steady and purposeful progress that we have made in achieving our economic objectives of low inflation, restored public finances and sustained growth. We shall make our choices. However difficult they may be, we shall make them. There will be many difficult decisions to take, but they will be taken well. We shall confirm that rhythm of good decison making about which I have spoken and which now underpins confidence.
A party that does not choose, or a party that cannot choose, is a party that does not govern. We are not afraid to choose, and that is why we now govern. When the critical economic decisions ahead have been made, the Government will present their package to the House, and

we will then look to my right hon. and hon. Friends to support that package—as I know they will support the Finance Bill which is before us.

Ms Harman: The Finance Bill makes it clear beyond all doubt that, because of the Government's failure on the economy over the past 14 years, the Conservative party is now the party of high taxation, high borrowing and high unemployment. Although the rhetoric is still there—we heard it again tonight—and although it was in the election addresses of Conservative Members and in the Tory manifesto, the Government's economic failure has led to a situation in which the rhetoric is wholly separate from reality. Conservative assertions about low taxation and sound public finance are now nothing more than an old aspiration that they have proved completely incapable of achieving.
It was clear from last night's debate that the Conservatives are divided, the Government are on the defensive and, worse than that, they have no strategy. Having failed to make the economy work properly, they are now—partly through desperation but also partly through dogma—planning this autumn to dismantle the welfare state. The autumn battle to defend public services will be a battle to defend the very heart of the welfare state.
The Chief Secretary said that there was good news on the economy, but the Finance Bill is dealing with the consequences of economic failure. If one looks at the measurements that matter—the growth of manufacturing output, gross domestic product and the change in manufacturing employment—the story is the same all round. We are way behind Japan. We are behind the USA. We are also behind Germany, Italy and France.
The Finance Bill does not contain any measures to help industry, but the Government have insisted on measures that threaten the North sea oil industry. Already today Shell has slashed exploration, which affects jobs.

Mr. Portillo: I am intrigued by the hon. Lady's comparison with Germany. I told her a moment ago that manufacturing output in this country had risen by 5 per cent. over the first five months of this year, while industrial production has fallen by 7 per cent. in Germany. How does she equate that with Germany being way ahead of us? Is she using a negative scale?

Ms Harman: I am not. The problem with Ministers is that they twist the baseline in order to present something that people know is completely at variance with reality. If we hear about the pound replacing the deutschmark, or of an economic miracle in this country, people will know that the Government are refusing to face reality. Therefore, there is no chance to put the economy right and deal with the deficit, and with investment in skills, in our infrastructure and in our industry.
The statement that the right hon. Gentleman has just made shows that he is more interested in presentation and trying to cover over the cracks of the Government's division than he is in having a serious economic policy to put right the deep problems in this country. He is not prepared to recognise the situation, so it is welcome that the hon. Member for Wolverhampton, South-West (Mr. Budgen) described the reality.
Last night, the hon. Member for Wolverhampton, South-West said that the Government were "near


bankrupt". The hon. Member for Southend, East (Sir T. Taylor) described the country as "bust". However, it is not only the Tory Back Benchers who have been describing the Government's economic failure. We have had a Conservative analysis of the economic failure of the past few years which I would like to quote to the House.

Mr. Stephen Milligan: As the hon. Lady will not pursue the point made by my right hon. Friend the Chief Secretary to the Treasury, can she explain how, when she makes an incorrect statement about German and British industrial production, that is perfectly fair, but when my right hon. Friend produces the correct figures, that is just a matter of presentation?

Ms Harman: The Chief Secretary to the Treasury did not produce the correct figures. If we consider the growth of manufacturing output in the G7 countries between 1979 and 1992, Japan had 50 per cent. growth; the United States had 32 per cent. growth; Germany had 23 per cent. growth; Italy had growth of 16 per cent.; France had growth of 7 per cent; and Canada had growth of 8 per cent. Would the hon. Member for Eastleigh (Mr. Milligan) care to volunteer the growth figure for the United Kingdom? I will give way to the Chief Secretary if he can tell us how we compare.

Mr. Dorrell: Perhaps the hon. Lady would like to tell the House what happened to manufacturing output under the last Labour Government.

Ms Harman: Against a figure of 50 per cent. growth in manufacturing output in Japan between 1979 and 1992, the United Kingdom had growth of barely 5 per cent. I am glad that the Financial Secretary to the Treasury has intervened because I was about to quote from his analysis of the Government's economic failures. The Financial Secretary said:
Think back six years. The yuppie revolution was in full swing. It had a lot going for it. It encouraged young people to regard wealth creation as a benign activity. It broke class barriers. It embraced change. It exuded confidence. All of that was positive. But it was built on sand.
How right he was. In this Finance Bill, the country is paying the price of those years of economic failure.
The Financial Secretary went on to say that
the resources that were attracted, like moths to a lamp-bulb"—
and to property development and to what the hon. Gentleman described as
the lure of easy money"—
were wasted resources. He said:
Resources are scarce, and we cannot afford the luxury of—
and he then described his own Government's economic policy as "waste and distortion." I have to agree with the hon. Gentleman about that.

Mr. Dorrell: Will the hon. Lady give way?

Ms Harman: No, I will not let the hon. Gentleman intervene.

Mr. Dorrell: Would the hon. Lady like to change her mind?

Ms Harman: No, I would not. I am afraid that I am going to be flinty-faced on this occasion.
This Finance Bill pays the price of economic failure, unemployment and the soaring cost of unemployment. When we consider the public sector borrowing requirement and the cost of unemployment, it is clear that the figures are enormous. The cost of unemployment in London and the south-east for one year is £8 billion. That is £8 billion just for one year to finance idleness, waste and forcing people to be on the dole.
That is why we have said all along that the reduction of unemployment should be at the heart of the Government's economic policy so that we can end the high dole bills and lift the fear of unemployment which, to this day, still hold the economy back. However, still lurking in the Government's view is the idea that the first objective is sound public finances, although the Government have failed to achieve that, and that somehow high unemployment is "a price worth paying".
Having failed to tackle unemployment, the Government are now turning on the welfare state.

Mr. James Paice: By how much does the hon. Lady believe that the public sector borrowing requirement could be lowered by reducing unemployment?

Ms Harman: It is clear that the PSBR is too high. That is the price that has been paid for economic failure and for high levels of unemployment. Economic failure has been the result of failure to invest in training, skills and our infrastructure. We need to invest in those areas to set the economy to rights.
It is no longer any good for the Conservative party to posture as the party of sound finances. The Conservatives have ripped the finances of this country to pieces through the failure of their economic policy. Having failed to tackle unemployment, the Government are now turning on the welfare state.

Mr. Quentin Davies: Will the hon. Lady give way?

Ms Harman: I am sure that the hon. Gentleman cannot be trying to intervene on my point about the welfare state because clearly he has no connection with it. However, many people have.
The Chief Secretary to the Treasury has said that the growth of the social security budget is
a sort of cuckoo in the nest.
He also said that
Prescription charges is only one of 100 different things to look at.
We have heard of a secret letter from the Secretary of State for Social Security referring to cutting and taxing invalidity benefit. He recognised in that letter that that would cause an outrage. The Government are turning on single mothers, complaining that they are on benefits and a drain on public finances. However, the Government deny them the child care and job opportunities that would enable them to work and be independent and able to support themselves and their children. That is what they want to do.
The Government have broken their promises. The Prime Minister said:
We have no plans and no need to extend the scope of VAT.
But that is exactly what the Government have done. The Government have said:
We are the only party that understands the need for lower taxation",


but in this Finance Bill they have raised taxation. The Prime Minister has also said:
I have no plans to raise … the level of national insurance contributions."—[Official Report, 28 January 1992; Vol. 202, c. 808.]
But that is exactly what he has done.
The Finance Bill raises taxes £17·5 billion over the next two years. It freezes personal allowances and puts 1 p on national insurance contributions and it affects VAT. Even now, the Chancellor of the Exchequer is warning that further tax increases are in the offing.
Tory Members cannot justify those tax increases on the grounds that they are the only way to raise public money. During this Finance Bill, we proposed 14 separate measures that would raise money, deal with tax abuses and plug tax loopholes. Not only did the Government reject them all—they would not even allow them to be debated.
The Tories would rather freeze personal allowances than abolish tax relief for private medical insurance. They want to subsidise people using private medical insurance and give them tax relief while freezing everyone else's personal allowances. The Government would rather put 1p on national insurance than tax the share options given to top executives. That is the Government's sense of priorities. In addition, of course, the Government would rather put VAT on gas and electricity than make the gas and electricity companies pay their fair share of corporation tax.
Treasury Ministers will no doubt claim that this Budget—this Finance Bill—has been a success. But it has cost the Government a Chancellor. It has cost the Government 400 Tory county councillors. It cost them the Newbury by-election and it will cost them the by-election in Christchurch.
How can the Government call it a success to increase taxes for the low paid and cause dismay among the elderly? The Chancellor is setting the scene for cuts in the welfare state and tax increases in the autumn Budget. But the country wants to see an economic policy that begins the task of putting our industry and economy back on their feet.
The Chancellor and the Chief Secretary, possibly over a bottle of champagne, might congratulate themselves on getting the Finance Bill through Parliament, but for the people of this country fear of this Bill will be followed by dread of the bills that they cannot pay. Parliamentary proceedings on the Bill may be drawing to a close, but the political fallout has only just begun.

Mr. John Watts: We have just heard the hon. Member for Peckham (Ms Harman) make some wild assertions. In particular, she mentioned the subject of tax relief for private medical insurance. She will remember that such tax relief is available only to those over the age of 60. When the proposal came before the House in an earlier Finance Bill, I did not vote in favour of it because I prefer not to increase the tax breaks that are available as a reduction of income tax. It will not be lost on the voters of Christchurch, 30 per cent. of whom are over the age of 60, that the hon. Lady is advocating, on behalf of the Labour party, that that tax concesson should be withdrawn.
I should like to consider three matters contained in the Bill which, as you reminded my right hon. Friend the Chief Secretary, Madam Deputy Speaker, is the subject of the debate.
I always look back on Finance Bills with a mixture of pleasure and disappointment. On Second Reading, I referred to the changes in the regime for petroleum revenue tax, and urged my right hon. and hon. Friends to improve the transitional relief offered. In Committee, my hon. Friend the Financial Secretary brought forward some further limited measures of transitional relief which the industry welcome, particularly the smaller companies towards which they are targeted. My hon. Friend knows, however, that I believe that those transitional measures do not go far enough.
The amendments which I tabled in Committee and which, with my right hon. Friend the Member for Woking (Sir C. Onslow) and others, I sought to table on Report, could not be debated on either occasion for technical reasons.

Mr. Robert Hughes: Will the hon. Gentleman confirm that he had a meeting last Thursday with the Financial Secretary? Will he further confirm that he told the oil companies' representatives that same evening that a deal had been stitched up and that the Government were going to accept his amendments Nos. 40 and 41?

Mr. Watts: No, I cannot confirm that. I can confirm that there was a meeting between my hon. Friend the Financial Secretary, representatives from a number of oil companies, myself, my hon. Friend the Member for Bournemouth, West (Mr. Butterfill), my right hon. Friend the Member for Woking and myself. At the conclusion of that meeting I certainly did not suggest to any representatives of the oil industry that any deal had been stitched up.

Mr. Hughes: Can the hon. Gentleman explain why I was telephoned on Friday morning, by a representative of an oil company who attended that meeting, and was asked, "Please will you make sure that no Labour Back Benchers sign the motion because, if they do, it will screw up the deal"?

Mr. Watts: I would have been very happy if I had been able to conclude a deal with my hon. Friend the Financial Secretary, but that is not what happened. There may be some confusion in the mind of the person who spoke to the hon. Gentleman. At the conclusion of our meeting, we explained the way in which the amendments had been framed and why there were two separate sets of amendments.
We considered that one set of amendments would be technically in order for selection but would not produce the desired solution. The other set of amendments would have achieved our objective of a three-year relief period, but we understood that if the amendments were tabled by Back Benchers they could not be selected for technical reasons. They would be in order only if they were tabled by the Government.
Our amendments were tabled on Thursday, which is normally the last day for tabling amendments to be considered on Report. It was our outside hope that, if my right hon. and hon. Friends in the Treasury were convinced of the force of our argument, they could be


persuaded to adopt our second set of amendments as Government amendments and provide a vehicle for them. It was not my intention, or that of any of my right hon. and hon. Friends, to convey to the representatives of the oil industry that any such deal had been struck. Indeed, as late as last evening, we discussed the matter further with my right hon. and learned Friend the Chancellor of the Exchequer. He had just returned from Brussels and we were grateful to him for making time to discuss the matter with us at such short notice. Sadly, the vehicle that we hoped to provide was not one that my right hon. and hon. Friends chose to ride in.

Mr. Darling: The hon. Gentleman will appreciate that this is a very important point, especially as Shell has announced that it is going to cut back on its drilling because of the changes that the Government intend to introduce.

Mr. Duncan: That is not what it said.

Mr. Darling: It is what it said.
The hon. Member for Slough (Mr. Watts) has mentioned that he had a private conversation with the Chancellor. Will he tell us whether the Government now accept that far more generous transitional relief must be offered to stop an even greater decline in exploration than that anticipated? That will have disastrous long-term consequences for the country's balance of payments.

Mr. Watts: I am sure that my hon. Friend the Financial Secretary will answer for himself. It is not my understanding that my right hon. and hon. Friends are yet persuaded that there is a need to go further than the measures introduced in Committee.
The purpose of the amendments that I tabled, in Committee and on Report, was to obtain relief, in a tax neutral way, over a three-year transitional period. That would have been financed by restricting the reduction of PRT to 55 per cent. for that period rather than going immediately to the 50 per cent. rate mentioned in the Bill.
I am persuaded by my hon. Friend the Financial Secretary's argument that the 50 per cent. rate of PRT will have the effect of stimulating further investment in existing mature fields, and that that will be beneficial to the future development of the North sea. I am not persuaded, however, that we will see such new investment in the near future. Any substantial investment will take two or three years to be productive. I believe that in that intervening period, exploration and appraisal activity will be subject to a marked decline before any major new investments come on stream.
Our proposals have been put in a number of different guises, but our intention has always been to smooth that transition. We want to give those parts of the industry that have been hardest hit by the tax changes more time to adapt. That would enable a high level of activity in the North sea to be maintained in the intervening period, and ensure smoother progress for our North sea oil industry.

Mr. Salmond: Will the hon. Gentleman clarify what happened at last week's meeting because I was given the same information as the hon. Member for Aberdeen, North (Mr. Hughes)? It may be a question of who is misleading whom. Were the hon. Gentleman and his hon. Friends misleading the representatives of the oil

companies with unwarranted expectations of success, or were he and his hon. Friends being misled by Ministers promising concessions that did not materialise?
It is to be regretted that the hon. Gentleman's amendments were not tabled on an all-party basis. If they had been, the issue could have been put to the test yesterday. Presumably, all-party amendments stand a better chance of selection than those tabled by Conservative Back Benchers.

Mr. Watts: I am clear in my own mind that neither I nor any of my right hon. or hon. Friends was misled by Ministers. It was not our intention to mislead any representative of the oil industry. I have tried to explain how I think some confusion may have arisen. I certainly did not give any indication to anyone in the industry with whom I was in contact that I believed that a deal had been done. I was certainly trying my hardest to bring about a solution, but we have failed. That is why I referred in my opening remarks to looking back on the Bill with a mixture of pleasure and disappointment. That failure is one of the disappointments.
Even at this late stage, I urge my right hon. and hon. Friends in the Treasury to look again at what has happened in the North sea. Perhaps they will be proved to be right and that the anticipated dramatic reduction in activity will not occur or, at least, will not be sustained—activity in the North sea has already markedly declined.
The hon. Member for Edinburgh, Central (Mr. Darling) referred to the announcement by Shell UK Exploration and Production yesterday that it was reducing its manning levels by 30 per cent. I understand that there have been some denials about whether that was directly related to the change in the tax regime, but there is no doubt that it intends to reduce its exploration activity.

Mr. Duncan: Do not the statements that Shell UK Exploration and Production has made to the press make it explicit that its decisions were made a long time ago and that its decision to reduce its activity has nothing whatever to do with the change in the PRT regime announced in the Budget?

Mr. Watts: That may be what the company maintains, but it is reducing its activity and, not surprisingly, some people will link the changes in the tax regime with that fact.

Mr. Dorrell: This is an important point. Opposition Members were shouting "No" when my hon. Friend the Member for Rutland and Melton (Mr. Duncan) intervened. My hon. Friend is right. The statement issued by Shell UK Exploration and Production on 12 July says:
The cost cuts in the exploration division of Shell ExPro are not due to the proposed budget changes in PRT.
Nothing can be more explicit than that.

Mr. Peter Mandelson: On a point of order, Madam Deputy Speaker. The Financial Secretary has unwittingly—no doubt not intentionally—misled the House by his intervention. The memorandum written by a responsible person at Shell says clearly:
Doubtless you are aware … some very significant changes in petroleum revenue tax regulations will be implemented this year by the Government. The main effect that this will have on exploration is that our net costs will go up by a factor of four. In these circumstances, our exploration programme will have to be reassessed carefully.


That is at variance with what the Financial Secretary said.

Madam Deputy Speaker: Order. That may be an important point, but it is certainly not a point of order for the Chair. It should be raised by means of an intervention if the hon. Gentleman is able to have the Floor.

Mr. Watts: The hon. Member for Banff and Buchan (Mr. Salmond) asked whether orderly amendments could have been tabled on an all-party basis. To achieve a tax-neutral package of transitions, we would have needed to propose that the rate of PRT be maintained at more than 50 per cent. We wanted the transition to be a three-year period, which is longer than that provided for in the Bill. However, any such amendments tabled by mere Back Benchers would have been ruled out of order. I understand that the orderly amendment that we tabled was not selected because it was considered that the matter had been adequately debated both in Committee of the whole House and in Committee upstairs.

Mr. Robert Hughes: In attempting to explain the position, the hon. Gentleman is simply causing further confusion. Why did he and his right hon. Friends table an amendment which they knew in advance was out of order, and tell the oil companies that they knew it was out of order, if they had not believed that something would happen to it? Surely that was the worst thing to do because it was kidding the industry along.

Mr. Watts: The hon. Gentleman clearly did not hear my explanation. Two sets of amendments appear on the amendment paper today. The first deals with an enhancement of the 18-month transition period and could have been selected had it not been deemed that the matter had been adequately debated. We knew that the second set of amendments was not in order. It was tabled by Back Benchers and set out what we considered to be the proper solution to the problem. The Government could have adopted it as a suitable vehicle had they been persuaded of our argument but, sadly, that was not the case.

Mr. Darling: Will the hon. Gentleman give way?

Mr. Watts: I shall give way to the hon. Gentleman for the last time because I said that I would refer to three matters.

Mr. Darling: I am grateful to the hon. Gentleman for giving way because I was the first hon. Member to raise the question of Shell. I have seen the text of the memorandum to which my hon. Friend the Member for Hartlepool (Mr. Mandelson) referred. It says that the changed tax regime had made exploration four times more expensive. Shell has subsequently denied it, but companies do that sort of thing.
Our difficulty is that many Tory Back Benchers, including the hon. Gentleman, have unwittingly been sold a pup by the Government. Exploration and appraisal will suffer, and the oil companies may do better next time if they remember not to bother dealing with Tory Back-Bench Members or consultants, because that is throwing good money after bad.

Mr. Watts: Nobody has thrown money at me. I am not a consultant but I took an interest in the issue because it seemed to be a valid argument to pursue. I have financial interest neither in an oil company nor in a business representing an oil company. If I had such an interest, I

would have declared it at the beginning of my speech. My understanding of the Shell memorandum is exactly as the hon. Member for Edinburgh, Central (Mr. Darling) just stated. As he said, the company has now put a different gloss on the matter.
I was about to conclude my remarks on PRT by saying that I am still convinced that a substantial and damaging reduction in activity in the North sea could have been prevented had a three-year transition been provided. I hope that, if those of us who take that view are proved right and the Financial Secretary's more optimistic assumptions of what will happen in the next few months are proved wrong, even though it is too late Ministers will be prepared to reconsider the matter when preparing the November Budget and the next Finance Bill.
Lest it should be thought that I speak merely to pour condemnation on my hon. Friend the Financial Secretary, let me say that he also gave me pleasure in Committee because, for five or six years, I have been arguing for a more favourable tax treatment of unit trusts selling into other European countries. The gist of the argument is that if unit trust companies could pay dividends gross to residents of other European countries, their export performance would be much better. Evidence suggests that that is so. Ten years ago, Luxembourg had virtually no such funds under management. It now manages £86 billion worth of funds and has outstripped the funds under British management.
I was therefore pleased when, in responding to the debate in Committee, my hon. Friend the Financial Secretary said that suitable measures would be proposed in the November Budget and incorporated in the next Finance Bill following consultation with the industry in the intervening period. That was welcome news, not just for the industry but for the financial services industry in this country. To avoid doubt, may I confirm that I am not a consultant for the unit trust industry, although it kindly sent me a crate—12 bottles—of wine earlier this year. We excel in the financial services industry and could increase our earnings on exports to the European Community. The Bill's measures will be greatly welcomed.
The third and final measure to which I wish to refer is the abolition of the business expansion scheme. It was probably right for the Government to propose that the existing scheme should be brought to an end. However, faced with the loss of my legislative programme for the Finance Bill now that my proposals on unit trusts have been taken up, and needing to look for another cause, that new cause may be "Son of BES".
I am convinced that we need to provide a means of encouraging equity investment, particularly in small manufacturing companies and other small companies. I hope that my right hon. and hon. Friends in the Treasury will consider how that might be done. If they do not make their own proposals, I may argue the case for the next five or six years until, in the fullness of time, my hon. Friend the Financial Secretary or his successor—I expect that my hon. Friend will be in a more exulted position by that time—concedes that it is a good argument and introduces his own measures.
Overall, this is a good Bill, although the measures relating to PRT are unattractive. It presents a balanced approach to improving the state of the national finances, and it is a good foundation on which my right hon. and learned Friend the Chancellor can build as he prepares his Budget for presentation in November.

Mr. Robert Ainsworth: The Chief Secretary said at least one thing with which I agree: that on Second Reading, in Committee and on Third Reading, the main issues have remained the same. Those issues are the reneging on election promises, the failure to address the underlying problems in our economy, and the nature and effect of the huge tax increases that have been proposed and are to be introduced in the measure.
I think that all hon. Members will recall the clear commitments that were given before the general election. They were that there would be no extension of VAT, no increase in national insurance contributions and—a commitment given in the clearest of terms—tax decreases year on year. The excuse with which we have been repeatedly presented is that the circumstances that we now face have changed and were totally unforeseen when those honest commitments were given to the electorate before the general election.
However, the Chief Secretary said tonight that there was a lot of good news in the economy. He talked about the success in the last three quarters, the fact that unemployment was down, and forecasts that showed that we would have the highest growth of the nations of the Organisation for Economic Co-operation and Development. What on earth should we believe? If those success stories are correct, what are the unforeseen events that have happened since the Government gave those clear pre-general election commitments that there would be no tax increases?
Last night, I heard Conservative Members say that one can, in certain circumstances, renege on election pledges, but there has to be some honesty of intent. If the Government have honesty of intent, why are they boasting about the wonderful news in the economy? If there is wonderful news in the economy, where was the honesty of intent in those pre-general election promises? The Government cannot square the circle. One or the other of their claims is not true. The nation is getting sick of the Government's slick presentation and wants them to give the facts about the problems that face the country.
A couple of years ago, when we were enjoying a huge budget surplus, the Government took the opportunity to decrease taxes, and they gave those decreases to the better-off in society. The biggest single adjustment they made was the abolition of all tax grades above 40 per cent. That act alone gave more than £2 billion to those who are better off.
Now that we are picking up the cost of those foolish measures and the inability to sort out the long-term problems in our economy, we have a huge £50 billion deficit in public finances. There are two major proposals designed to deal with that deficit. The first is to increase national insurance contributions. That policy was deliberately chosen rather than an increase in income tax, because it hits those on average and below-average earnings, while protecting those in the highest income tax bracket. The second and far and away the worst proposal in the Budget is the appalling proposal to impose VAT on fuel.
There has been much disquiet about the election promises and the proposals. In the past few weeks, that concern has centred on the issue of VAT increases. Almost all the representations which I and, I think, others have

received have been on the VAT issue. Almost all the representations that I have received have been from pensioners.
I do not believe that pensioners are the only people to have realised that they will be affected by the VAT proposals in the Budget; I do not believe that they are better informed than the rest of the population. The pensioners' representations have been made for one simple reason: fear. There is fear among ordinary pensioners living on, and just above, income support levels about how they will pay the increased fuel bills and survive.
We are told that the policy is not designed merely to raise revenue, but involves the environment. Does not the environment of those pensioners count? Is it not their world? Is their environment of no concern to those people who say that the measure is an environmental policy?
A recent survey conducted by Age Concern showed that already—without the implementation of the Budget proposals—30,000 to 40,000 more people die in this country in winter than in summer. It also discovered that 18 per cent. of pensioners had no insulation on their hot water tanks, 26 per cent. had no loft insulation, and 64 per cent. had no double-glazing on their windows.
If anyone—whether members of the Conservative party or supporters of Friends of the Earth—wants to support the measure on the grounds that it is a green policy, they should address the problems relating to pensioners. We are talking not about a green measure, but about a hypothermia enhancement measure—that is the effect that it will have on pensioners. That is the reason the pensioners have made representations, and the reason for their fear.
The people who have made representations to me fall into two categories. First, there are those who are already on income support, who are dependent on means-tested benefits and who do not believe that they will receive full compensation from the Government for the costs imposed on them by the proposals. They have no reason to believe that they will receive adequate compensation when they look at the Government's track record of deliberately and repeatedly reneging on their commitments.
The second category of people are those living just above income support levels, who receive no state benefits because they have struggled all their lives to make some small extra provision by paying into an occupational pension scheme or something similar. They now find that their prudence and the struggle that they have maintained throughout their lives by paying taxes and national insurance contributions has resulted in their being pushed into the poverty trap. The proposals will bring them no benefits.
The Chief Secretary said that he hoped that he had established a rhythm of good decision making. What sort of rhythm of decision making will the pensioners have to take up when they try to balance their water bills, council tax bills, rent bills and fuel bills? What sort of rhythm of good decision making does the Cheif Secretary suggest that the pensioners should adopt?
Undoubtedly, the Government are proposing deliberately and cynically to make the poorest people—the most vulnerable in the country—pay for their own mishandling of the economy over not only the past three or four years but the past 14 years.
The Conservative Government told the nation that they were the Government of prudent economic management. However, they have got themselves into such a mess that


we are now imposing these appalling measures on pensioners. It is disgraceful. I hope that the Government are never forgiven for deliberately reneging on their election pledges. I shall do everything in my power to ensure that they are not forgiven.

Mr. Alan Duncan: It is almost four months since the Budget statement was read to the House. Since then, we have studied it in great detail, on the Floor of the House and in Committee.
As we reflect on our deliberations, it is important to recall the mood that prevailed when the Budget was read. Spending was admittedly high, and we knew that that matter had to be addressed. There was a strong feeling that any severe attack on public spending could jeopardise what was seen to be a fragile recovery. My hon. Friends were wary of doing anything too severe so as not to put into reverse the small signs of progress that could already be observed as the economy crept out of recession.
On Budget day, I said that the Budget could have been tougher on the public sector borrowing requirement—I still hold that view—because I felt that the most attested economic phenomenon is probably the business cycle. However fragile we might think the recovery is, the business cycle has a momentum of its own which we expect to perform.
When I study research papers on economic indicators in the Library, I am always struck by how steeply the graph is pointing upwards to reflect the increasing size of the public sector borrowing requirement. That must determine our decision on whether the Finance Bill tackles what needs to be tackled.
A lot has happened since Budget day. Of course, we now have a new Chancellor. I pay tribute to my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), who drafted the Budget. He is an economic radical. The Budget definitely had his personal stamp on it. Setting aside all the political problems that have beset him since he spoke in the House on 16 March, he can feel justly proud of the way in which the Budget is shaped, and the economic prosperity that it will deliver in due course.
We must put the Budget in the context that, because the United Kingdom was the first country to go into recession we are showing that we are the first to come out of it. That puts us in a unique position to take advantage of the improved competitiveness in the British economy as we emerge from recession while our partners are still suffering.
Only a cursory look at Germany and France shows that, in contrast to our economic fortunes, they are facing severe difficulties. A visit to Germany shows that, in Stuttgart, 25,000 people have been laid off at the Mercedes-Benz factory, the production of Porsche cars has gone down by about 80 per cent., and the machine tool industry is all but in a state of collapse.
The German economy, which depends heavily on the motor industry, is facing severe difficulties. Effectively, having bought a bankrupt country, the Germans must now support the debt that they took on to do so. Having invested so much pride—and rightly so—in sustaining the value of their currency, they face a severe conflict between deciding how to protect the parity of the deutschmark and reducing interest rates to stimulate economic activity. I do not envy them that problem. Indeed, we had the same

problem. None the less, it will shape the economic behaviour of our European partners over the next few years.
The problem in France is not quite so severe—

Madam Deputy Speaker (Dame Janet Fookes): Order. Before the hon. Gentleman continues his tour of Europe, I must remind him that we are debating the Third Reading of the Bill. Although it is in order to take some general economic policy as background, it must not turn into a debate on policy that is unrelated to the Third Reading of the Bill.

Mr. Duncan: I am grateful for your guidance, Madam Deputy Speaker, and I will abide by it. I was merely setting the Budget in context. The judgments contained in the Bill can be justified. In making such judgments, we must increasingly examine our European competitors to assess whether the judgments made in the House can be supported.
In reverting to the details of the Bill, my right hon. Friend the Member for Kingston upon Thames will be vindicated in the details that he injected in the measures by having a delayed clawback in the structure of the public sector borrowing requirement for the future. To retrieve £6·5 billion in 1994–95 and £10·5 billion in 1995–96, it is necessary to build economic confidence, but at the same time not severely to attack a fragile recovery.
We are in a good position as a result of the Bill. Inflation is now below the EC average, and our interest rate is the lowest in the EC. At 6 per cent., it is the lowest rate since December 1977, and the fifth reduction since we left the exchange rate mechanism. As a result of the Bill, unemployment has shown an unexpected improvement, costs and earnings are increasingly contained, car registrations are up, and industrial production and exports are up.

Dr. John Reid: Can the hon. Gentleman explain how unemployment has fallen as a result of the Bill when it has not yet been enacted?

Mr. Duncan: People are well aware of what the Budget contains, because the Bill has been discussed in detail in the House and in Committee. Indeed, giving the Bill Royal Assent merely confirms that the House wishes to see it enacted.
The Finance Bill sets the foundation for sustainable growth. We still have certain structural problems and a certain bias to housing, which has been addressed by ensuring that mortgage interest relief at source is at the lowest rate. There are many things that we will have to discuss in the November Budget.
The Finance Bill has brought us back to reality. It will ensure that we entertain realistic expectations of what the economy can deliver. It does not suggest that there is any good sense in making a dash for growth. Rather, we will see growth of 1 or perhaps 2 per cent., plus 1 per cent. and then another 1 per cent. The Bill will ensure that we have the sustainable prosperity for which we must aim.
During the passage of the Bill, we have listened in vain for any constructive alternative from Labour Members. The speech of the hon. Member for Peckham (Ms Harman) was completely bereft of any alternative proposal for or commitment to what she thinks the upper


rate of tax should be. She did not say why the Labour party dropped its election policy of imposing an investment income surcharge on savers.
If she was still here, I would ask the hon. Lady whether she agrees with the shadow Chancellor that to raise income tax would be a mistake, and would probably take demand out of the economy. How would she fulfil her party's pledge to increase Government spending without raising taxes? What does she think is the correct level for the public sector borrowing requirement? We missed all that from Labour Members.
I commend the Bill to the House for the Third Reading that it so properly deserves.

8 pm

Mr. Beith: I will not attempt to answer many of the questions that the hon. Member for Rutland and Melton (Mr. Duncan) put to the hon. Member for Peckham (Ms Harman), because I would be ruled out of order. We are supposed to be discussing what is in the Finance Bill.
The Chief Secretary sketched in the economic background, which it was reasonable for him to do, and I do not quarrel with the main elements he quoted as favourable and positive in the current economic climate, although he was inclined to leave out some unfavourable elements.
For example, the construction industry is still not showing the signs of recovery that are vital in that crucial sector of the economy. The unemployment news cannot give the Government ease and comfort. We have very high levels of unemployment, and most commentators expect them to persist, even if there are some offsetting job improvements through gains achieved by British exporters in world markets.
Hon. Members point out that many countries are going deeper into recession as we are coming out of it. They talk about that as good news, whereas it is really bad news for exporters, who must sell into markets which are in recession. Other countries being in recession acts as an inhibition on our recovery. We should not be pleased about their plight. No more should we be pleased about the continued high import penetration of our domestic economy, which remains a worry for industry.
I was tempted to intervene in the speech of the hon. Member for Slough (Mr. Watts) to say that he was pouring petrol over the Government but not putting a match to it. On the other hand, the hon. Member for Corby (Mr. Powell) last night poured domestic fuel over the Government and put a match to it by pointing out—[Interruption.] I am not sure whether political self-immolation was a necessary part of that—that the Christchurch by-election, and, by implication, any other by-elections that may occur in the near future, is likely to go against the Conservatives because of the provisions in this measure.
The Bill includes the hated and feared VAT on domestic fuel, imposed without adequate compensation or channelling of revenues into measures that will help people to pay for it by making their homes more energy-efficient. That alone is sufficient reason to oppose the Bill.
The Budget, of which the Bill is a part, contains in effect an income tax increase, even though it is not to be found in the Bill in that form. The 1 p increase in national

insurance contributions represents an income tax increase for the low-paid, because all higher levels of income are not subject to the 1p charge. Perks, which are subject to income tax but not to national insurance contributions, escape. In other words, it is a back-door income tax increase, and we were not able to discuss it at earlier stages of the Bill because it is being done through the national insurance system.
The Bill imposes substantial additional burdens on charities, through VAT and changes in advance corporation tax, both of which will hit them hard. Hon. Members are still receiving extensive representations on the issue from charities.
The Bill's petroleum revenue tax regime is costing thousands of jobs. That cannot be denied, because, whatever is happening at Shell, thousands of jobs will be lost in the oil industry and in many others which that industry supports and from which it buys. I was struck by a revised Shell statement, quoted in the Financial Times today, which bears the hallmark of some careful drafting. A company spokesman is reported as having said:
The PRT changes have underlined, and given focus to, what we were already looking at in the North Sea".
Those were carefully crafted words. They put into sharp relief the fact that one of the only two companies which welcomed the new PRT regime is shedding a vast number of jobs. The other company is also shedding many jobs.

Mr. Dorrell: For the sake of completeness, the right hon. Gentleman will want the House to know that the sentence which he quoted finishes with the words:
without further affecting the drilling programme.

Mr. Beith: Even so, it significantly affects the exploration programme, which is the complaint that everybody is making about the new PRT regime. Many companies, particularly those committed on the exploration side, are devastated by the new regime.
It is a bitter blow that, after all the pleas that they received, including many from Conservative Members, the Government have still not gone nearly far enough, even in transitional provisions which would have helped the industry with the difficulties that it is facing. The Government cannot be oblivious to the severe job impact that the regime is having, not just in Scotland but throughout the United Kingdom.
I urge the Government to realise that oil exploration workers live in all parts of Britain. One need only go to Newcastle airport on a Friday night or to Leeds station or Teesside airport to see people going home to all parts of the United Kingdom, particularly to areas down the east coast, from areas of oil activity. That is not to mention the many companies supplying the oil industry.
The Bill will unfairly tax people who are forced to move because of their work. In particular, it will tax van drivers unfairly, and what a group of people to pick on. Instead of imposing a scale of charges in a field of activity that increasingly has been taxed by the Revenue, when the Revenue caught up with it, the Government have imposed such a high scale charge that, for example, people on modest incomes who drive vans and take them home so that their tools will be safer overnight, rather than leaving the van on site, will be subject to an unfairly high tax charge.
There are serious faults in the Bill—right from large aspects to the micro-elements of its provisions. In many respects, it takes'a wrong attitude to the tax system. That


attitude is not based on fairness. The Government are too fond of direct taxes, they are too fond of national insurance contributions as a means of raising the equivalent amounts by way of income tax, and they are too hostile to rises in standard and higher rates of income tax, which would be a fairer means of increasing taxation, if it is necessary to do that.
Had the Government wished to introduce provisions to achieve an extremely large increase in taxation over, say, the next two years—the Bill does precisely that—they should have addressed fairer means of achieving that objective. They would have been subject to much less criticism from the Opposition had they done so. They would still have been criticised for creating a situation in which such tax increases were necessary, but they would at least have placed those increases on the population on a fairer basis.
The Budget and the Finance Bill do not square the circle. There will remain a large public sector borrowing requirement. The Government must have regard to the PSBR and seek to reduce it, but I warn them not to be mesmerised by it. To do so could lead them into some extremely mistaken decisions. As well as a substantial budget deficit, there is in Britain a substantial investment deficit. There has been a considerable failure to invest in areas of crucial importance to the economy.
Historically, we have not in recent years had a high PSBR. We do not have a high level of existing national debt. We have a large and worrying PSBR which could have marked consequences, so we cannot ignore it, but if we were to rein back severely on investment as opposed to taking action on current expenditure, we could be adding to, rather than ending, the damage. We would be bringing about a situation in which the long-term problems of the British economy that have helped to get us into the present mess would persist into the future, and perhaps even get worse. So the Government must draw a distinction between current and investment expenditure in their attempts to deal with the PSBR. They must not be so mesmerised by the PSBR that investment and capital expenditure are severely damaged into the future.
The Chief Secretary set the Bill in the context of what he described as "steady and purposeful progress", and "good decision making". His use of such phrases surprised me, because we have been on a roller coaster. We have gone from the most ridiculous heights of boom into the most desperate depths of depression. The hon. Member for Rutland and Melton knows that, because he has delivered a critique of Thatcherite economics, of which we shall hear more on an appropriate occasion.
Yet the Chief Secretary—the man who gave us the poll tax—talks about the considerable costs and other elements of Government that will have to be reined in. He has been an expensive man for the Government to have around—he gave us the poll tax and all its costly consequences—so he will find it hard to convince some of us that his credentials are sound when it comes to making sensible cuts in public expenditure.
The Chief Secretary may talk about good decision making, but I cannot recall another Finance Bill during my 20 years in the House when the Chancellor who delivered the Budget has been sacked before the Bill had completed its legislative course. Not only has he been sacked, but he comes before us in the midst of our considering the Bill and says that there has been
too much short-termism, too much reacting to events".

He added:
We give the impression of being in office but not in power. Far too many important decisions are made for 36 hours' publicity.
When we read the Bill, the right hon. Gentleman's words ring in our ears. He went on:
I believe that in politics one should decide what is right and then decide the presentation, not the other way round. Unless this approach is changed, the Government will not survive, and will not deserve to survive."—[Official Report, 9 June 1993; Vol. 226, c. 283.]
We saw an instance of that last night, when, in a vote on a crucial part of the Bill, the Government had a majority of only eight. Their majority is shrinking, and it will shrink more after the Christchurch by-election: they will be increasingly unable to get Bills such as this through the House, and increasingly required to respond to the House's demands. Moreover, that will apply at a time when—as the Government themselves point out—difficult decisions must be made.
The Government cannot simply go for what is popular; I accept that. They must present the House with tough packages, which—while dealing with the current deficit, and the urgent needs of the economy—are at the same time seen to be fair. That, in my view, is where the Bill fails. It is seen not as a fair Finance Bill, but as an unfair way of inflicting the price of the Government's mistakes on the people.
Well may it be called a Bill: it is the bill that the people must pay for those mistakes. It is the sort of bill that arrives in a brown envelope through our constituents' letter boxes. It does not provide for constructive investment in the future, or for the easily definable good things that the country needs; it is the bill for the mistakes that the present Government have made. I well understand why so many people resent having to pay it, and resent the unfair distribution that it represents.

Dr. Liam Fox: One of the aspects of the way in which the House deals with legislation is the fact that, by the time we discuss the Finance Bill, some time has elapsed since the Budget statement: it seems a considerable time to those of us who served on the Standing Committee.
As my hon. Friend the Member for Rutland and Melton (Mr. Duncan) said, however, it is clear that recovery is now under way. We are seeing increased manufacturing output and more housing starts—an increase of 18,000 this year—lower inflation and more employment. At the time of the Budget statement, we wondered whether the recovery was sustainable; now we know that it is.
In a lucid intervention, the hon. Member for Motherwell, North (Dr. Reid) asked how the Budget could be taking effect when its provisions had not yet been passed. As the Chancellor said at the time, the important feature of the Budget was that any tax increases would come later so as not to choke off the recovery at its outset. His important statement that there would be no tax rises this year has made it possible for the recovery to take root as strongly as it has.

Dr. Reid: Will the hon. Gentleman give way?

Dr. Fox: Many others wish to speak, but, as it is the hon. Gentleman, I will.

Dr. Reid: I thank the hon. Gentleman for his courtesy. Does his logic suggest that, when the tax increases are introduced next year, the recovery will be undermined?

Dr. Fox: Given his knowledge of economics, the hon. Gentleman should understand that, by that time, the recovery will be so well under way that the greatest threat will be not a lack of consumer confidence, but the need for sound public finances. The Government's overwhelming duty will be to tackle that task. In this context as in others, the Government will ultimately be judged on whether what we leave behind is better than what we inherited. That means not only improving living standards and lowering inflation and unemployment, but reducing public debt. That is the point that I made to the hon. Gentleman earlier.
Some hon. Members seem to believe that the Government will make short-term decisions. Several have already mentioned the Christchurch by-election. I trust that my ministerial colleagues will make no decisions that might be influenced in any way by the thought of a forthcoming by-election, but will do what the Conservative party was put in office to do—make the correct decisions, however unpopular they may be in the short term.
One fundamental principle must guide us. As we go for growth—as we undoubtedly will—the value of money should not be up for grabs in our economic policy. That means that we must reduce spending.
I praise the efforts of my right hon. Friend the Chief Secretary to the Treasury in the spending review it is surely right to consider welfare spending as part of overall spending. The welfare state was originally intended to be a genuine partnership between Government and those who needed help, rather than a perpetual Santa's grotto that would deliver money to anyone who happened to pass through it. That surely must still be the right approach.
It would also be wrong to suggest that the current recovery is based solely on the short-term measures that we have announced since the Budget. Surely that recovery is also due to the supply side reforms of the 1980s, not least the reform of the labour and trade union movements. The flexibility that we now enjoy will lead to faster falls in unemployment than we could otherwise have expected—and those supply side changes would have been possible only under a succession of Conservative Governments. We must resist the temptation to rewrite history as having begun in 1989 or 1992; the Government's economic policy goes back to 1979.
The lesson of the policy of the late 1980s is that growth is sustainable only if inflation is kept low. It gives Conservative Members no great pleasure to admit the mistakes of the monetary policy of the late 1980s—a policy that advocated over-loosening of a money supply that the Opposition urged us to loosen even further. At least their economic policy is consistent in one respect: they demand interest rates that are perpetually 1 per cent. lower than the Government want at any given time, whether the requirement is for a tightening or a loosening of the money supply.
We must not return to the house price inflation of the 1980s. We must be willing to tax consumption, and we must not be willing to tax earnings. That surely is one of the fundamental differences between Government and Opposition.
I am disappointed to note that the hon. Member for Peckham (Ms Harman) is not present. She talked of 14 years of Conservative economic mismanagement; yet unemployment was reduced from 3·2 million in 1986 to 1·5 million in 1990, despite the arrival of 1 million more people on the jobs market. That is a record that we would gladly repeat. We repaid £14 billion of national debt in a year—the very national debt that the hon. Lady was keen to see repaid as soon as possible. But our monetary policy was too loose.
It is sad that, in a debate that lacks the fevered atmosphere of a more packed Chamber, the hon. Member for Peckham could not bring herself to accept the basic truth. She could not even accept that, while the German economy is now in recession, the British economy is growing. It is indeed sad when that level of maturity cannot be achieved on the Opposition Front Bench.
Even worse, the hon. Lady revealed that—as all of us who served on the Standing Committee already know—she does not know the numbers. When my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice) asked by how much the public sector borrowing requirement would be reduced if unemployment fell, she was—as ever—unable to give a figure. It is a remarkable feat for a shadow Chief Secretary to make a speech in a finance debate without mentioning any figures. I suppose that Opposition Members must be very careful when the shadow Cabinet elections are approaching, even if three women have to be elected.

Mr. Salmond: Will the hon. Gentleman give way?

Dr. Fox: No, I will not.
I was also disappointed to hear the accusation that the Government were not willing to tolerate debate on the Opposition's amendments to the Bill. The simple truth is that, if those on the Opposition Front Bench had been remotely competent in drafting the amendments, the Chair would not have ruled them out of order.
Our prosperity ultimately depends on sound public finances, honest money, individual and corporate incentive, and export-led growth in an increasingly deregulated market. I believe that this Finance Bill sets us well on the road, and I commend it to the House.

Mr. Alan Milburn: This Finance Bill is very long; if my memory serves me aright, it runs to 312 pages. As I recall, the Chancellor's speech also set records for its length—it certainly felt like that sitting on these Benches listening to it. But long speeches and long Finance Bills do not add up to much, certainly not to a strategy for economic recovery. Indeed, any prospect of a sustained recovery will be undone by the legacy of 14 years of gross economic mismanagement and the inadequacies of this Finance Bill. The deep-seated problems of the United Kingdom's economy, which hon. Members on both sides of the House recognise, are left untouched by the Bill and, arguably, are compounded by it.
Take the long-promised consumer-led recovery about which we have heard so much this evening, and from the Government Front Bench over the last year or so. Even if it is accepted that a personal consumption boom rather than an investment-led recovery is necessary to get the


British economy back on its feet, the personal sector debt remains too high and confidence remains too low to promote a new consumer boom.
The threat of unemployment continues to deter too many individuals from taking major investment decisions. Since the general election, 8,000 people in Darlington have experienced unemployment. Unemployment remains the single biggest social and economic problem faced by this country. It is a sure sign of the Government's priorities that the new Chancellor of the Exchequer, in his first Mansion House speech, did not even utter the word "unemployment". He does not recognise the problem; he has no solution for it; and I am afraid that the Finance Bill is a direct reflection of that failure.
The Finance Bill threatens to make matters worse by imposing higher tax rises on people on low and middle incomes. Those people are still struggling with the effects of falling property prices; they are still suffering from having mortgage debts around their necks; and they still face the threat of redundancy. Any consumer upturn will be snuffed out by this approach.
The real failure of the Finance Bill—I believe that this is recognised, in all honesty, by hon. Members on both sides of the House—is that it turns its back on measures to plug the investment gaps that hinder Britain's ability to compete. With Europe already heading into a deep and damaging recession, and accounting for some 60 per cent. of United Kingdom exports, the prospects for an export-led recovery are difficult in any case; in this situation, it is surely doubly incumbent on the Government to act to help Britain's competitive position.
What has been the Government's response? The Bill introduces a special 40 per cent. capital allowance scheme, presumably because it is recognised that it will help to speed industrial investment. But the Government have ignored the pleas, not only of the Opposition but of the Confederation of British Industry and other business organisations, who have all called for the maintenance and extension of that special capital allowance scheme. Indeed, in the Red Book, the Government recognise that business investment this year will not remain stagnant, but will fall.

Mr. Dorrell: Perhaps the hon. Gentleman would like to remind the House also that business investment in plant and machinery, which he says will fall this year, is now 50 per cent. higher in real terms than in 1979, and that total business investment, as the recession is coming to an end, is still higher than it was at any time during the 1960s and 1970s measured as a percentage of gross domestic product.

Mr. Milburn: If business investment has been so successful, the Minister might like to explain to the House why, even in the middle of a recession, British companies still cannot meet even weakened consumer demand, and hence the massive increase in Britain's imports bill. I notice that the Chief Secretary to the Treasury, when he spoke earlier, lauded Britain's export performance, but he totally failed to mention the dreadful state of our imports bill. I am afraid that, once again, the Government's priorities and, indeed, their double dealing on economic statistics have been laid bare before the House and the country.
The parlous state to which our manufacturing base has been reduced by the Government requires more than rhetoric from the Prime Minister; it requires action, and it certainly requires more than a one-year, one-off, headline-grabbing investment incentive. British industry

now receives less financial support from the Government than its competitors in any other European country. We are even falling behind the newly industrialising countries of the Pacific rim in terms of investment, training, and research and development.
The Finance Bill could have represented a turning point in the Government's approach. Instead, it is business as usual: it is free market, hands off, non-interventionist. The short-termism that has so characterised the last 14 years of Conservative economic policy has rarely been made more explicit. It will be the whole country that, in the medium term, will pay the price. The writing is already on the wall. The fact that the imports bill continues to boom in the middle of a recession is a sure sign that British manufacturing has been seriously weakened by the Government's performance. Whole sectors have simply been wiped out, so that even a modest recovery will precipitate a balance of payments crisis far worse than that envisaged by the former Chancellor when he delivered the Budget. The real results of the Government's economic mismanagement will be realised only when and if recovery finally arrives. It is then that their failures will be most clearly exposed.
Quite simply, the Finance Bill does nothing to tackle the economic mess created by the Conservatives. Instead, it asks the country to foot the bill for the Government's failures. Inevitably, it will be the people on low and middle incomes who will be asked to pay the price. They have been betrayed and let down by a Government who promised the earth—recovery, tax cuts and a new boom—and delivered precisely the reverse. The Finance Bill means the biggest rise in British history.
The Chief Secretary to the Treasury outlined the figures—some £17 billion to £18 billion in just two years. The Bill makes a mockery of Tory claims from the last general election, but it is at least consistent in one respect: 14 years of Tory tax policy have increased, not cut, the tax burden, and it has weighed most heavily on those least able to pay. Meanwhile, the wealthiest people.in society, representing a fraction of all taxpayers, have had the benefit of a veritable tax bonanza, paid for by the rest of us. The regressive nature of the tax rises, the imposition of value added tax on fuel, the freezing of personal allowances and, of course, the increase in national insurance contributions affect every taxpayer, but they particularly affect the low-paid.
The Finance Bill, interestingly, also hits those on middle incomes. In a parliamentary answer dated 22 April, the Financial Secretary admitted that, as a result of the freeze on personal allowances, there would be 120,000 more higher rate taxpayers. Similarly, restricting the married couple's allowance to 20 per cent., as proposed for the next financial year, would increase the number by a further 210,000. Like the poorest people in society, people on middle incomes are being asked to dig deeper to pay for the massive tax handouts to the very rich over the past few years.
I remind the House that top-rate tax cuts have earned the wealthiest more than £10 billion since 1988, when Lord Lawson, as he now is, introduced his tax-cutting Budget. They have done very well out of the Government, and they continue to do so. The Government's failure to tackle tax evasion and abuse earns the wealthiest people in society a pretty penny. Why should a person earning, say, £20,000 a year have to pay tax on his income, while a person who


receives a bequest of, say, £100,000 pays nothing because he can afford to pay tax advisers and thereby avoid his inheritance tax liabilities?
The Government could have done something about that in the Finance Bill, but they refused to do so. The result is that we have a financial scandal on our hands. The nation's coffers are being plugged by increases in national insurance contributions and income tax and, of course, by the VAT extension. By contrast, the very wealthiest are getting off scot free.
The Bill continues to give inherited wealth an enormous tax break. The very richest are subsidised while the very poorest are penalised. So much for the Prime Minister's classless society. This Finance Bill is a con. It aids the wealthiest by affording enormous tax loopholes to them. It stings the poorest and those on middling incomes with swingeing tax rises. It does nothing to promote lasting recovery because it fails to promote investment in jobs or in industry. That is why the Bill deserves to be rejected by the House.

Mr. Quentin Davies: For the second time this afternoon I should remind the House of my interests which are declared in the Register of Members' Interests, in particular of my connection with NatWest Securities, Dewe Rogerson and the Institute of Taxation. 
We had a characteristic performance this afternoon by the hon. Member for Peckham (Ms Harman). It was certainly long on charm and on what my right hon. Friend the Chief Secretary rightly called fragrance. On substance, however, it was short, I fear, to the point of superficiality. [Interruption.] As the hon. Member for Hartlepool (Mr. Mandelson) says from a sedentary position, that is what I always say. Yes, that is what I always say, precisely because it is always justified.
The Labour party's economic policy consists of saying, in the most mindless fashion, that the answer to unemployment is to spend money and that everything else will follow on from that. It is far from clear that that would happen. No coherent argument has been advanced by the Opposition showing why the sudden expenditure of public money would reduce unemployment. Very much the reverse would occur.
Even if we were to suppose that the spending of public money was the way automatically to reduce unemployment, the Opposition ought, if there were any economic rigour about their thinking or any reality at all about their plans, to tell us by how much they are prepared to increase taxation, or by how much they are prepared to see the public sector borrowing requirement increase in the short term in order to bring about the so-called reduction in unemployment over the medium or longer term that the model that they hawk about predicts. To that we are never given an answer. A so-called alternative Government who are not prepared to face the costs of their own policies deprives them automatically of the right to be taken seriously. The performance of the hon. Member for Peckham has done nothing even to begin to fill the enormous credibility gap that the Labour party has consistently opened up.
I pay sincere tribute to the Government's determination to reduce the PSBR. A year ago, I admit, I was less

concerned about the rigour of fiscal policy. We were then part of the exchange rate mechanism. We are no longer part of it. Things have changed considerably. No country can with impunity afford for long to have a reduction in interest rates, a relaxation of monetary policy and a devaluation as well as an increase in the deficit, or a relaxation of fiscal policy. In present circumstances, therefore, it is particularly important that we should make a vigorous and, if necessary, a ruthless attempt to cut public expenditure and reduce the PSBR.
I pay tribute to the courage of my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) and the rest of the Treasury Bench in putting together this Budget which has laid the basis for increases in public revenues next year and the year after that. I thoroughly agree with the revenue-raising measures that have been selected: the increase in the taxation of company cars and the application of tax to allowances at the 20 per cent. rate, which seems to me to be right and proper. I thoroughly agree, too, as I said earlier this afternoon, with the extension of VAT to domestic fuel.
When the combined Budget and public expenditure statement is made in November, I hope that those measures will be accompanied by a demonstrable effort on the part of the Government to cut their own spending—I hope to below the level of the control totals that were published last year for this year, next year and the year after. It is a necessary move. Therefore, I hope that it takes place.
As for VAT, I know that the Government will not be discouraged by the fundamentally synthetic agitation of the Opposition, none of which was accompanied by an explicit commitment by the Labour party to abolish VAT on domestic fuel should the Labour party, by some mischance, be returned to power. [Interruption.] Well, we shall see, but we are used to the Labour party accusing the Government of spending too little, of taxing too much and of having too large a PSBR.

Mr. Geoffrey Hoon: The hon. Gentleman sat with me throughout the Committee proceedings on this Bill and knows full well that European legislation will not allow this change to be revoked. Is he suggesting that the Labour party would defy European law, or is he suggesting that his own party would be in a position to do so?

Mr. Davies: The hon. Gentleman has put forward an absolutely splendid excuse.

Mr. Mandelson: That is true.

Mr. Davies: Indeed.

Mr. Mandelson: The hon. Gentleman should therefore sit down.

Mr. Davies: The hon. Gentleman clearly wants me to end my remarks, which encourages me to feel that I may be scoring a few hits.
I hope that the Government will go further and extend VAT to other things as well—in fact, to everything, with the sole exception of food and children's clothing, for which we have negotiated, with some difficulty, a derogation from Community rules. What I hope that the Government will not do and what they have correctly not done in the Finance Bill, which I hope we shall send on its


way this evening, is to increase direct taxes—income tax, capital gains tax and corporation tax. Those are the three—

Mr. Betts: Will the hon. Gentleman give way?

Mr. Davies: No, I am not going to give way, and I shall tell the hon. Gentleman why. On several occasions this evening the hon. Member for Peckham refused to give way to me during her speech. As you know, Mr. Deputy Speaker, I am normally very generous in giving way to the Opposition. I did so earlier today when I was on my feet. There must, however, be some reciprocity. Therefore I propose not to give way but to continue with my speech.
It seems to me to be absolutely right not to increase the rates of those three direct taxes. I hope that the Government will continue on that course when they present their next Budget at the end of this year. They are the most economically damaging taxes. Perhaps the most economically damaging of them all is capital gains tax, for it has a direct impact on risk taking in the economy. All three of them, though, have a direct impact on incentives to work, on incentives to invest, on the location of industry and on the choice of residence.
It is tempting and popular to say that the rich should be clobbered and that we ought to introduce a new higher rate of tax of 50, 60 or 70 per cent. for higher incomes or, alternatively, that the 40 per cent. rate ought to be increased in respect of those categories of income to which it currently applies.
But that would be very damaging. The more attractive, in political and demagogic terms, it is to increase the rate of income tax as one moves up the income scale, the more economically damaging it is to do so. We are talking about people who are relatively more and more internationally mobile—well paid lawyers and financiers, as well as the pop stars and tennis stars, who could pursue their activities equally well in Paris, New York, Geneva or any other one of a whole variety of places. It would be very foolish to drive those people away. In this context, I hope that the Government will be very careful indeed not to mess about with the residency and domicile rules. Were they to do so, many of the people to whom I have referred would not be here.
Over the past few years, there have been great advantages—in terms of inward investment, the location of industry and the residence of people—in our acquisition, for the first time since the second world war, of the reputation of being, by international standards, a lower-tax area. Previously we had the reverse reputation. I hope that nothing will be done to damage this very considerable achievement—one of many—of the Conservative Government over the past 15 years.
It is a pity that the Government have not taken the opportunity afforded by this Bill to iron out some of the anomalies that result from the differential taxation of certain benefits. I hope that they will do so next time round. As hon. Members know, some non-means-tested benefits, such as the old-age pension, are regarded as income—which, indeed, they are—and are subject to tax in the normal way, whereas others, such as child benefit and invalidity benefit, are not regarded as income and are not subject to tax. There can be no rhyme or reason in that. Taxing all those benefits would not in any way constitute an attack on the poor. People whose income consisted entirely of benefit would not be liable to tax. However,

there is no reason why anyone receiving benefit on top of another significant income should not have to pay tax on it. I hope that the Government will address this matter.
The hon. Member for Peckham, among others, said much about the future of the welfare state. It is true that the welfare state does a wonderful job in the protection of many vulnerable people. It prevents a great deal of misery among families. All parties in the House are united in believing that a welfare state is necessary to a humane society. However, the present system is riddled with anomalies and perversities of all kinds and requires thorough examination. For example, it is absurd that teenagers receive housing benefit at public expense although they come from loving families that want them back. There have been some very tragic cases in my constituency. Why should children be paid to stay in some hostel in an inner city, such as Manchester or London, where they run all kinds of risks? In fact, public money is being used to support the unnecessary break-up of families.
I am sure that you, Mr. Deputy Speaker, would not want me to stray into the general area of welfare state and social security policy. I should like, however, to refer to a number of very clear taxation implications in this field. For example, the Bill makes provision for the so-called protection of people in receipt of income at or below income support level from the effect of the extension of VAT to domestic fuel. It must be realised that every time we "protect" certain categories of people below the benefit level against such price increases but do not do the same for others, we produce a perverse social and economic situation. We reduce the gap between what people earn by way of income support and what they would earn if they were in work. As a result, we reduce the marginal return to work. We reduce, at the margin, the willingness of people to go back to work and, thereby, run a higher level of unemployment than is necessary. That is very dangerous.
If old people have a little income in addition to their pension, if they have worked all their lives and have made a great effort to save a little—perhaps a few hundred pounds a year, amounting to £10,000 or £20,000—out of a modest income, why should they be deprived of benefits on the ground that help is being targeted at people whose income is below a certain arbitrary poverty level? Such a policy would send to society as a whole the signal that work and thrift are not to be rewarded and that people who work and save will be made fools of. Clearly I am referring to those whose incomes are not much above the level that would entitle them to income support and other benefits such as assistance with mortgage interest payments. We would pay a price, in terms of employment and of the propensity to work and save—indeed, the whole culture of society—by going down that road. I hope that the Government will be very cautious.
This has been a good Budget in extremely difficult circumstances. No Chancellor could produce a blockbuster, popular Budget in the present climate. Indeed, it would be wrong and irresponsible to do so. The Government have been quite ingenious in putting together a package that will enhance revenues. If ingenuity in this respect can be matched with ingenuity and equivalent effort in the reduction of Government expenditure, we shall show the world that we mean to bring our fiscal deficit down. We shall lay the basis for the confidence that our economy needs if the very encouraging upturn that we


have seen in recent months is to be sustained in the 1990s, as happened under the Conservative Government in the 1980s.

Mr. Salmond: As several hon. Members who have sat through the debate want to participate, I shall be brief. The magic carpet that mysteriously transports Conservative Members into the Chamber has some time to operate.
As I listened to the Chief Secretary's speech, I had a strange feeling of déjà vu. I was trying to place the quotation that the right hon. Gentleman used at the climax of his address—the one about governing and choosing and choosing to govern. I knew that it was from a resignation speech, but we have had so many of those over the past few years that I could not quite place the valedictory address that was the source. Then it came to me. The speech was that of the noble Lord Lawson addressing the House as Chancellor. As on this occasion the idea came from the Government Front Bench, I thought that it must mark the rehabilitation—or at least the reconstruction and development—of Lord Lawson's position in the Conservative party. That must be very refreshing for the noble Lord after so many years of having the finger pointed at him for all the ills that have befallen the economy. However, it will be some time before the latest fallen Chancellor—who at half-past seven appeared like Banquo's ghost and took a long look at the Government Front Bench—reaches the stage of rehabilitation. I do not know which Minister would play the part of Macbeth, but I would not recommend an overnight stay in the house of any of them.
In an intervention during the speech of the Chief Secretary, I referred to growth in the economy. The Red Book forecast is 2·5 per cent.—exceptionally modest indeed. A growth rate of 2·5 per cent., on average, over the next few years is not just exceptionally disappointing—it will come nowhere near closing the fiscal deficit in the economy. Thus the Government's hard choices between tax increases and spending reductions will be very severe indeed. It also means that the structural weakness in the United Kingdom economy has been laid bare for all to see.
We have experienced the longest recession in living memory. Yet the recovery from recession is not so much a bounce back as a clawback. We are not engaged in a dash for growth; if anything, it is a crawl for growth, and the so-called economic miracle of the 1980s has been exposed for what it was—if, of course, the Government's forecasts for growth over the next few years are accurate.
If I were a member of the Government Front Bench, I would be worried not only about the £1 billion per week deficit in the public sector borrowing requirement but in particular about the £1 billion per week deficit on the balance of payments because, as sure as eggs are eggs, that deficit will ensure that the faltering recovery is aborted in a balance of payments crisis sooner rather than later.
It was interesting that, apart from a brief mention of the success of exports in recent months, at no point did the Chief Secretary show any appreciation of the extent and inevitability of the enduring problem of the balance of payments, especially when oil forms less of a protection for

the United Kingdom's balance of payments. I should have liked the Bill to contain a realisation of the key underlying problem of the economy.
With the Budget, the Government visited a double whammy on the people of Scotland. The first blow was the changes to petroleum revenue tax. For the sake of completeness, I shall read into the record an internal memo distributed to Shell staff in Scotland. It gives what may be called the private company view of the effect of the oil tax changes as opposed to the public view which was hastily cobbled together when the private view was unfortunately released to the newspapers. The internal memo reads:
Doubtless you are aware … some very significant changes in Petroleum Revenue Tax regulations will be implemented this year by the Government…The main effect that this will have on exploration is that our net costs will go up by a factor of four. It will be clear that, under these circumstances, our exploration programme will have to be reassessed carefully.
Strong reductions in this activity will force us into corresponding reductions in staff. In total we are looking at a reduction in manpower of approximately 20–30 per cent. of the present workforce in exploration between now and the end of 1994.
It is clear and unambiguous that the internal company view, at least of the exploration side of the business, is that the PRT changes will mean the loss of fairly massive numbers of jobs. Let us remember that that is the view of one of the handful of oil companies which were in favour of the PRT changes; one can only imagine what the consequences will be for the vast majority of oil-related companies which were strongly against the PRT changes.
We should be grateful to the hon. Member for Slough (Mr. Watts) for trying to enlighten us about the process which ended in something like a farce yesterday when the out-of-order amendments tabled by Conservative Back Benchers were not selected for debate. The hon. Gentleman probably left us none the wiser about the tactics of that group of Conservative Back Benchers, and I should have thought that in-order amendments tabled on an all-party basis may have had a better chance of selection than out-of-order amendments signed only by Conservative Back Benchers.
My constituents were this morning treated to the sight of the right hon. Member for Woking (Sir C. Onslow), on the front page of The Press and Journal, holding a copy of the newspaper and saying that he would fight on against the PRT changes and would be trying to speak in the debate tonight. It must be especially disappointing to them that that particular knight in shining armour has been notable by his absence.
I do not know if there is still a backroom, back-stair strategy to try to get a concession from the Government to mitigate what will otherwise be a calamity for jobs in the oil industry, a calamity running into the loss of thousands of jobs. To judge from his current demeanour, I do not think that the Financial Secretary is going to enlighten us. It was a great mistake that the issue could not be forced to a vote yesterday because there is clearly all-party concern about the impact of the PRT changes, just when the oil industry is in a cyclical downturn. It is probably one of the most significant matters in the Budget in terms of an immediate effect on jobs.
The second aspect of the double whammy is the well-ventilated increase in fuel tax. I and my colleagues have for many years campaigned for a cold climate allowance, a recognition within the social security


structure of the fact that there are different climatic conditions in various parts of the United Kingdom. Often, especially when there are only faltering changes to the current social security provision, we despaired of getting any reasonable concession but never in our wildest imaginings did we think that we would end up with a cold climate surcharge through the imposition of value added tax on fuel. People who pay 30 per cent., 40 per cent. or 50 per cent. more a year on fuel than the United Kingdom average will be infinitely worse off. Let us be clear: the imposition of VAT on domestic fuel will not save the world from environmental damage, but it will sacrifice pensioners and low-income families, especially those in areas with poor climatic conditions.
In summary, this Budget was introduced by a failed Chancellor and it is being ushered by a failed Treasury team.

Mr. Peter Luff: I am grateful to you, Mr. Deputy Speaker, for allowing me to catch your eye despite my discourtesy in not being in the Chamber to hear at least two speeches. I was attending an extremely important event elsewhere. You will understand that when the chairman of one's regional television company is hosting an event on the Terrace, and when he is a constituent, a certain priority attaches to being there, especially as the occasion was to say goodbye to the political editor of Central Television, Jon Lander, who has served this House so well in so many ways through the years.
This is a historic occasion because it is the last Finance Bill that we shall discuss separately from the public expenditure statement. I for one look forward to the new unified structure for presenting the national accounts, which we shall receive in November or early December this year. I suspect that the Treasury team has had an especially difficult battle in Committee trying to remember what is going into the next Finance Bill and what is in the current Bill. The House owes the team a debt of gratitude for the skill with which it negotiated the Bill through its Committee stage.
I look forward to the fact that in the combined expenditure statement there will be a splitting of capital and current expenditure. It is a long overdue measure which will allow for much greater clarity in the presentation of our national accounts and will enable the House to take a more enlightened and informed view of the true state of the public sector borrowing requirement.
I welcome the fact that the House recognises that the public sector borrowing requirement is the fundamental issue confronting the Treasury team and the Government. Even the hon. Member for Peckham (Ms Harman) seems able to agree with that. Having heard her remarks earlier, however, I am still not sure what the Labour party believes to be the right level for the PSBR. I have heard what Treasury Ministers and others have said about the likely relative weight of the cyclical and structural elements of the PSBR, but I regard the £15 billion to £20 billion structural element as being too high. I welcome unreservedly the steps taken in the Finance Bill to narrow that gap, raising about £6·5 billion of revenue in the next financial year and about £10·5 billion in the year after.
I cannot, however, unreservedly welcome the Bill. Sadly, certain things that I should have liked to see in it are not. Perhaps those omissions are, at least in part, a product

of that first year fixation which seems to have mesmerised the Treasury down the years. I am afraid that, just as in business it is sometimes necessary to invest to generate revenues in later years, so it is necessary for the Treasury occasionally to take a view about what sums of money might sensibly be spent in year one to ensure that there are revenues to spend in years two, three and later.
Before mentioning two or three of those matters, I must declare an interest. For several years I have had the privilege of advising first the General Council of British Shipping and now the Chamber of Shipping, and my work with the shipping industry has persuaded me of the imperative need to do something to help that industry. I am disappointed that nothing in the Bill helps the shipping industry. In Committee on the Floor of the House we had a useful and constructive debate on an amendment when in a series of speeches Conservative Members expressed the concern that the party feels about the future of the shipping industry. It was something of a disappointment to me that Ministers were not able to be more generous in their response to that debate, for the shipping industry would derive special benefit from a more informed and enlightened approach to the first year fixation to which I referred earlier.
I am in no sense questioning the Chair's selection of amendments, but I regret that new clause 19 was not selected for debate on Report, as that would have enabled us to debate another aspect of the investment needs of the shipping industry. I think that I speak for the shipping industry when I say that I am grateful for the intelligent, informed and constructive debate with Treasury Ministers and officials that has been possible in recent months. As a result, we are at least beginning to build some kind of general agreement about the costs likely to be incurred as a result of the measures that the industry seeks. That is at least a step forward.
The House will be aware that two principal issues relating to investment in shipping would have been welcome in the Bill: 100 per cent. capital allowances for shipping, the subject of the amendment in Committee, and roll-over relief, the subject of new clause 19. Those measures alone will not produce the revival of the British shipping industry that all hon. Members want. Other measures relating to employment are necessary, but they are not matters for the Finance Bill.
I am grateful to my hon. Friend the Financial Secretary for his recent answer about relative corporate tax regimes as they relate to shipping industries in the European Community. That answer showed that, even on the Treasury figures, the relative, advantage to the British shipping industry is much smaller than is sometimes claimed from the Dispatch Box. The answer did not deal fully with many of the important nuances that apply to shipping company taxation in other EC member states. The combination of those effects is to make the British taxation regime for the shipping industry the most unfavourable in the EC. I, for one, cannot accept that as a permanent state of affairs.
My hon. Friend the Minister for Transport in London recently stated from the Dispatch Box that he intended to seek to phase out other countries' state aid. His view is widely shared by Conservative Members. We do not want shipping, or any other industry, to be subsidised unreasonably, but when other countries provide advantages to their companies through the tax system, we should seek the same treatment for ours. My hon. Friend said that


his policy was to seek to phase out those other state aids, so I am disappointed that the Government are not making much progress with the increases in aid being given by the German, French and Dutch Governments to their shipping industries. All those countries are doing more, and I am afraid that at present our Government seem reluctant to do anything.
We are in danger of throwing away an industry in which we enjoy real competitive advantages in the international economy. I understand that there is a problem with the way we do our public accounts. Who should pick up the bill? The Department of Transport obviously would not be happy with an increase in its budget provision for that sector without receiving some additional total funding from the Treasury, although it is worth recalling that only 2 per cent. of Department of Transport expenditure goes on air and sea combined. The Ministry of Defence, which ought to have a vested interest in picking up the bill because of the enormous bonus that a strong British merchant fleet provides to the country's defence, is also reluctant. The Treasury, because of the first year problem that I mentioned, seems to be equally reluctant. If I were an entrepreneurial member of the Cabinet I would beseech the Treasury to be allowed to pick up the bill in year one, so long as I could have the profits in years two, three, four, five and six, because I would have a lot more money to spend if I took that approach.
I especially agree with the comments of my hon. Friend the Member for Stamford and Spalding (Mr. Davies) about residence and domiciliary rules. London remains the maritime centre of the world, and that is in large part due to the presence of foreign nationals engaged in shipping activities. It has been a long-running obsession of the Inland Revenue to try to tax those people on the same footing as British residents, which would kill the goose that lays the golden egg and drive those residents elsewhere, causing a great loss to the British economy. So I am glad that at least we seem to have resisted that temptation in the Bill.
Another industry that might have looked for slightly more sympathetic treatment in the Bill is the British beer industry. There must be concern about the effects of steadily higher rates of duty on beer, the effect that those rates have on depressing sales in the United Kingdom and especially the encouragement that that provides to personal and even illegal imports with the completion of the European single market. I hope that as Ministers approach the next Finance Bill they will look carefully at the price elasticity of those increases in duty and decide whether they generate additional or less revenue for the Exchequer, either through the port of Dover or in the loss of sales at the local pub.
The Government have recently taken a number of welcome steps to benefit the car industry, such as the abolition of the special car tax. One has only to look at the increase in car registrations that has occurred as a result. The Government have also benefited the scotch whisky industry. Speaking as someone who intends to holiday in Scotland this year, I am glad of the warm reception I shall get for that measure. The Government have even looked after the horse racing industry. All those measures are good and I hope that a similarly enlightened view will prevail in relation to brewing and shipping.
It has been said that the Bill contains hard thinks, and it does—especially the matter of VAT on fuel and power. I cannot pretend that I welcome that tax, but I recognise it as essential and one that I will definitely support. It is important to remember that fuel prices have fallen in real terms since 1986. Electricity prices are broadly level, but they are going down this year. Gas prices have fallen by 20 per cent. because of the tough regulation that the Government introduced to accompany the privatisation of those industries. Despite the phased increase in VAT over the next few years, many people will be paying less in real terms for gas than they would have been before the imposition of VAT and before the privatisation of those industries. We must remember that that compares sharply with fuel bills under the previous Labour Government, when electricity prices rose by 30 per cent. in real terms. What was done then to help the poorest members of society?
I believe that the imposition of VAT is important to raise revenue. That is its clear objective. I also have no hesitation in supporting it on environmental grounds. At Question Time earlier, my right hon. Friend the Prime Minister explained the hypocrisy of the Opposition parties on that issue. We heard then of their policies. We heard what the Opposition said was necessary to protect the environment by reducing carbon dioxide emissions. I especially welcome the endorsement by Friends of the Earth of our attempts to increase measures taken to control carbon dioxide emissions.
It is right, though, to sound a small warning. I am sure that those on benefit will be fully compensated and I welcome that unreservedly. However, there is the question of those just above benefit levels, especially single elderly people. I hope that the next Finance Bill will not increase the burdens on those with modest incomes who are not eligible for benefit, especially those living on their own. A number of recent measures have had an adverse impact on that group and I hope that the burden will not increase in future Finance Bills.
The Bill has had a reassuring effect on foreign exchange markets, which has in turn affected interest rates. We should be careful before further reducing interest rates. I hear no great calls from companies in my constituency for a further reduction and we should recognise the implications that any reduction would have for those on fixed incomes.
I welcome the stability that the Finance Bill and the promise of future levels of revenue that the Government plans have brought to foreign exchange markets, and the beneficial effect that that has had on interest rates as a result.
The hon. Member for Peckham (Ms Harman) earlier accused the Government of not facing facts. I believe that the Bill shows that the Government are all too prepared to face the facts. I would remind her, were she still present, of the rise in manufacturing output. I would also remind her that in my region, the west midlands, manufacturing output and business optimism are running at the highest level for many years—according to one survey, the highest level since the survey began eight years ago.
The production of Land Rover Discovery vehicles is up by 44 per cent. and 300 more jobs are sought for the production line. Unemployment is down for the fourth month in a row, inflation is at a 29-year low, decades of decline in our share of world trade have been halted,
exports are up by 6·5 per cent. in the first quarter of this year and manufacturing investment is up by 5·4 per cent. in the same period.
Those are the facts that the Opposition should be facing and I hope that they will have the courage and honesty to do so, though somehow I doubt it. It is no wonder that in reflecting on the economic strategy of the Labour party and what it might have introduced through the Finance Bill if—God forbid—it had been the party in power, Tribune said on 23 April:
Dissatisfaction with Lbour's hopelessly unconvincing economic policies … is widespread within the Shadow Cabinet".
The success of this Finance Bill has been proved. There is growing recovery, a strengthening pound, falling unemployment and falling inflation. The broad strategy of the Bill is essential to our continued economic success. There are no sins of commission in the Bill. In a mildly critical passage, I have highlighted some sins of omission. I hope that the second 1993 Finance Bill will begin to address those sins of omission, but I have no hesitation in commending this Bill to the House.

Mr. Jim Cunningham: The hon. Member for Worcester (Mr. Luff) referred to the improvement in the economy, and he referred specifically to the west midlands. I should remind him that there are still about 250,000 unemployed people in the west midlands. In my constituency, there are still redundancy announcements at companies such as GPT, which has announced 300 more redundancies over the past three or four weeks. The same thing is happening at Dunlop in Coventry. I should like to know where all the signs are that the economy in the west midlands is improving in the way in which the hon. Member for Worcester suggested.
There is no doubt that the Bill does not deal with the hidden time bomb of the balance of payments problem, to which many hon. Members referred. If we analyse the balance of payments, we may find that the industrial base of many of the wealth-creating industries—manufacturing industries—has been eroded. That has an effect on the creation of wealth in the national economy.
I was interested in the Prime Minister's statement yesterday in which he referred to the talks on the general agreement on tariffs and trade. The Government and their partners have not resolved the agricultural problems involved in GATT. Also within that statement—it is relevant to the Bill—the Prime Minister did not hold out any hope that there would be any major reduction of unemployment in the western economies. We must look at the Government's measures, particularly in the Bill, to tackle the balance of payments problem, unemployment and wealth creation.
Only afortnight ago, together with a number of colleagues, I met the old-age pensioners' lobby. Some hon. Members have referred to the concerns of old-age pensioners and I do not want to dwell too much on that. When old-age pensioners apply for state benefits, their meagre savings are taken into account; as a result, the pensioners do not accrue any interest on them, and that affects their planned budgets. As we know, most old-age pensioners have some form of planned budget to run their homes, so they will be hurt by the increases in VAT and the changes in their state benefits. There is a double whammy which should be minimised.
Some Cabinet committees are looking at Government expenditure outside the Bill and as part of it. They are looking at cuts in the national health service and there has been talk about charges. About a fortnight ago, thousands of people outside the House expressed great concern about possible post office closures. Therefore, we are not just looking at the Bill in relation to the economy as we understand it. There are hidden factors at work within the economy that the Bill does not necessarily address. I hope that the House will give serious thought to those issues.
The Government have said that they have a medium-term economic strategy. They have not spelled out to the House what they mean by "medium-term". Do they mean 10 years down the road, three years or 12 months.
Over the past 14 years, we have had a succession of Budgets that it was claimed would put right all the economic ills of Britain. They have dismally failed to do that. It is no good going back 14 years and making comparisons with the last Labour Government. The economic policies that are practised by the Government are those of the ancient Britons rather than of the modern Britons.
The Chief Secretary's opening remarks certainly alluded to my hon. Friend the Member for Peckham (Ms Harman). I interpreted his remarks as a job description for the position not only of Chief Secretary but of shadow Chief Secretary. I could not help but think that that job description might have applied in an ideal world; in other words, his words showed the wishes and visions of a Don Quixote rather than those of a strong Government determined to tackle Britain's economic problems and equally determined that sacrifices should be made on a fair basis. The Bill does not address those matters.

Mr. Betts: The Budget is almost exclusively about the Government's obsession with curing the Budget deficit that they have created. The previous Chancellor of the Exchequer talked in his resignation statement about the absence of long-term policy thinking from the Government. He could also have said, had he been more objective, that the Government's economic policy had been based on a number of obsessions.
The Government's obsession in the early 1980s was with dealing with inflation, and that obsession caused the disastrous collapse of our manufacturing industry. The Government were then obsessed with financial deregulation, which created the credit boom and the debt overhang with which the Government must now cope. Their obsession with inflation at the end of the 1980s caused the longest recession in Britain since the war. Now the Government's obsession is with the public sector borrowing requirement.
The Chancellor's one policy statement since his appointment—if one can call it that—said, in effect, that if the recovery is stronger than the Government think, tax incomes will go up. There will then be less of a need for the Government to act by making public expenditure reductions and further tax increases. Unfortunately, the reverse is also true: if the recovery is slightly less strong, there will be a greater need for the Government to impose more tax increases and cut expenditure further. The worry


is that the Government are obsessed totally with the PSBR. The recovery comes as an afterthought in that process.
The recovery and the appalling problems of unemployment should be the Government's prime objectives. I do not mean simply short-term unemployment, when people have been out of work for two or three weeks; I mean cases such as the young man to whom I talked in Sheffield recently. He is aged 27 and has never had a job in his life. He has moved from one training scheme to another. He has had the misfortune to spend the whole of his working life—or, in his case, non-working life—under the Government and their policies.
It is not true for the Government to say that the recovery is under way and that it is all right for them to deal with the PSBR by raising taxes or reducing expenditure. A recent survey of Sheffield industry was carried out by The Star and a local firm of accountants. The results showed that
despite the recent spate of news concerning recovery, businesses believe the effects of the recession will be felt into 1994 and beyond and that the real recovery will be delayed until then.
More than half—62 per cent.—of business respondents
thought the recession would end in 1994 and beyond.
A similar figure—68 per cent.—thought that
Government policy was not working for the benefit of UK businesses".
That is what businesses in Sheffield feel about the Government's claims about the recovery.
Despite the Chief Secretary's analysis of the PSBR, the problem is totally the Government's fault. Cyclical PSBR problems are the fault of the immediate recession, but the structural problems of the PSBR are the fault of the Government's long-term economic policy and the underlying weakness of the economy.
It worried me that the Chief Secretary did not answer my earlier question. The Government do not understand the difference between the cyclical and the structural problems of the PSBR or how to deal with them. If they get it wrong and attempt to tackle the structural problems at the wrong point in the economic cycle, they will squash any faint hope of recovery. That will cause damage for years to come. The Government have not faced up to that issue and are not prepared to answer questions about it. They have not seen the need for action, and their idea is that one can somehow mirror the national economic situation as an aggregate of household budgets.
The Chief Secretary talked about a bank account. That is a throwback to the neoclassical economics idea that macro-economics is merely micro-economics writ large. Let us learn some lessons from the past. Wynne Godley, one of the seven wise men appointed to help the Chancellor, said in a submission to the first round of the Chancellor's review that he believed that eventually the PSBR would
add enough to national output to generate enough tax revenue… to cover not only the addition to public expenditure, but also the interest payments which have been generated by the additional public sector debt.
That answers the Chief Secretary's point about the problems of a cyclical recovery reducing the PSBR by the full amount.
I agree with my hon. Friends that the real problem for the Government is not the PSBR but the balance of

payments crisis—a £12 billion debt at a time of economic depression. That boils down to a lack of economic and industrial capacity, caused by the Government's economic policies. The real problem for the Government is that there is a limit to the amount of recovery that can be generated without creating an even bigger balance of payments deficit. There is also a further restraint in the shape of how the cyclical element of the balance of payments can be dealt with during the recovery, and the Government have not come to grips with it. For an answer, they should go to the Bank for International Settlements, which recently said:
Growth above the current rate will be required to reduce the budget deficit but could increase the current account deficit. On the other hand, growth compatible with a stable current account deficit might lead to an unsustainable rise in the public sector imbalance.
The Government are not facing up to that dilemma. It is no use Conservative Members saying that fiscal restraint is not the answer—that the Government can deal with the problem by relaxing monetary policy. We have not heard what the Government's monetary policy is. Do they have one? It is all very well saying that we have left the exchange rate mechanism so there are now no international restrictions; there is every evidence that the Government are merely shadowing the deutschmark at DM2.5. Is there an internal, domestic policy governing the money supply? It is certainly unclear how the Government see monetary and fiscal policy.
The Government have an obsession with the PSBR to the exclusion of all else. One objective does not make an economic policy. We know from the previous Chancellor that the Government have no long-term policies: in my submission, they have no short-term economic policies either. They have created an appalling economic mess. They should be condemned for that, and doubly condemned for the fact that they have no coherent economic strategy to get the country out of the mess that they have created.

Mr. Hoon: The Bill is based on a lie told to the British people at the time of the general election—the lie that a Conservative Government had no need and no plans to raise taxation, and that people could vote Conservative in the expectation of tax cuts to come. That was the essence of the Conservative appeal to the electorate in the election campaign.
Within 12 months, the Government brought in the Bill, imposing a series of tax increases and changes on the British people—not only VAT increases and increases in national insurance contributions but alterations in allowances and reliefs against income tax for almost everyone, increasing taxes right across the range of measures that are available to any Government. When challenged repeatedly about that, the Chief Secretary defends each tax regime measure almost cheerfully. He cheerfully admitted this evening that this was a revenue-raising, tax-increasing Budget. He did that in Committee and he has done it again tonight. It is necessary, he says, to fund the £50 billion deficit at the heart of the Government's finances.
What is curious about the right hon. Gentleman's approach to the deficit is the fact that he has consistently failed to deal with its causes. Where does the deficit come from? It is almost as if it arrived one day from another


planet and was nothing to do with the Government, who have had, rather distastefully, to deal with it. Yet throughout the election campaign and parliamentary progress on the Bill Conservative Members have attacked the Labour party's spending plans even though a Conservative Government are forecasting a £50 billion deficit. They are therefore not in the strongest position from which to criticise.
Apart from admitting to a newly discovered enthusiasm for raising taxes, the Government have provided us with little analysis of how they got into such a sorry state. Instead, they continue to try to face both ways, claiming to be the party of tax cuts just as they significantly increase the burden of taxation on the British people.
In Committee, the Financial Secretary pointed to the limitation on reliefs to 20 per cent. as a sign of the Government's so-called commitment to reducing taxation. It is a remarkable exercise in double-speak for a tax-raising Government to try to claim credit for their so-called commitment to reducing taxes by increasing income tax for anyone with a mortgage, yet pretend that it was a sign of better things to come. 
There is little doubt that the measures are designed to deceive and defraud the electorate—big tax increases now with a view to smaller tax reductions later. Some Conservative Members may ask what is wrong with that. The answer is clear: it is making the British economy and the British people subservient to the interests of the Conservative party in being re-elected. It makes them subservient to the interests of Ministers who want to keep their jobs, ahead of the real interests of the country.
Anyone who has any doubts about that argument should consider the history of the past two Budgets. The 1992 pre-election Budget was designed to win votes at a time when serious economic commentators were pointing to the dangers of the growing size of the public sector borrowing requirement. When asked about that during the general election, what did Ministers say? Minister after Minister stated that he saw no difficulty with the PSBR, that he had no need to raise taxes, that he had set the right targets for public expenditure.
Twelve months later, those same Ministers are standing on their heads, their forecasts and promises empty of content and meaning. Are we really to believe that they were genuinely caught out by some apparently unforeseen growth in the PSBR? Those same Ministers, in the 1992 general election campaign, confidently forecast recovery for the British economy. They predicted that their assessment of the country's needs for borrowing and taxation could be contained within the guidelines set out in the 1992 Budget. They had access to all of the relevant Government figures when they said last year that their assessments in April 1992 were accurate. They were either incompetent or dishonest. Which is it? It is important that we and the British people know the answer.
I have little doubt that the Government plan to make most people's lives more miserable this year, next year, and perhaps even the year after. By 1996, the likely Tory target date for a general election, they can start easing back. They can look for tax cuts and handouts going into a general election campaign, paid for by the tax increases in this year's Finance Bill. That is their real policy. It is not so much an economic policy as a re-election policy. By then, as electricity and gas bills start to hit the doormats with their 17·5 per cent. Government surcharge, the British people will he looking for change. The Government will no

doubt introduce proposals to reduce the level of income tax, not for the benefit of the British economy, but simply to boost their prospects of re-election.
The Government cannot expect that deception to work yet again. It is time for them to stop playing politics with the British economy and to face up to the fundamental problems that their policies have created.

Mr. Mandelson: It is no secret that Opposition Members hate the Budget, which is being implemented by the Bill. We hate it for what it does not do about unemployment, which has dramatically increased in so many regions and is still chronic in regions such as mine. We hate it for the unfairness of its measures and the savage impact that it will have on so many of the needy and most vulnerable. We hate it for the distance that the Government have travelled from the glossy gift-wrapped prospectus that they presented to the electorate in the election campaign last year, notwithstanding the fact that Opposition Members will be the political beneficiaries of the betrayal of so many of the Tories' supporters last year.
We wanted to see in this Budget ideas to get the young people in our constituencies and communities back to work, to get the long-term unemployed back to work, or at least on proper quality training schemes where they can pick up skills in readiness for the recovery, whenever it occurs. In no sense have we seen a Budget for jobs. That is undoubtedly the greatest indictment of the Budget and the Bill, the effect of which will be felt by so many people in our constituencies.
The Bill is grossly unfair and unequal in its impact on different sections of the community. It is ironic, although perhaps not surprising, that those of us who served on the Committee considering the Finance Bill spent many hours sorting out problems and making things better—but, tragically, not for the people in real and desperate need. Throughout, the Government cared most about their friends—for example, the Lloyd's names, for whom they have created what will probably turn out to be a highly beneficial tax shelter. For large oil companies, there is massively reduced petroleum revenue duties. As speaker after speaker has reminded us, this measure will destroy jobs in exploration among the medium-sized and smaller oil companies as well as the onshore activity that is so important in my constituency and others in Scotland and in the north-east.
The Committee even took time to create a tax break for wealthy foreigners so that they could buy homes here without running the risk that they might be caught for tax. Tory Members may say that that was worth only £10 million, but was that £10 million used for the poor, for the low-paid, for struggling businesses? No, it was for the friends of the Tory party. It was particularly symbolic for that.
It was noteworthy, but probably predictable, that nothing of equal value requiring similar effort was done throughout the proceedings of the Committee to close the loopholes and stop the abuses that offer such opportunities to the already wealthy and well-off, and other friends of the Conservative party. The Government know how to look after their friends. They have not even bothered to chase up those missing millions—the £1·7 billion-in last year's uncollected taxes. That is twice the sum that went uncollected in the previous year and possibly, most


significantly of all, twice the expected revenue from VAT on fuel that the Government are intending to claim next year.
In Committee, we should have spent our time implementing a straight quid pro quo, ensuring that there were measures in place to collect the uncollected taxes from the most wealthy and privileged, rather than extending VAT on fuel—a tax on warmth, light and heat. It is not surprising that that is seen as the most notorious, nefarious and objectionable feature of the Bill, which will haunt the Government from here to Christchurch and back via Newbury.
The contrast between what the Government promised that they would do for the low-paid, the typical taxpayer and the middle-income earner and those whom they are actually helping goes to the heart of what is so damnable and objectionable about the Bill. It has laid bare the whole cynical, fraudulent case that the Conservative party put to the voters at the election last year. The Tories said that it would be safe to reduce taxes and possible to lower borrowing and that it would not be necessary to increase costs or impose new charges. They said that economic growth would square the circle and deal with the details, yet the Budget and the Bill have put up taxes. The Bill has done nothing to get people back to work, enabling borrowing to be reduced; instead, it has increased the cost of living, of mortgages and employment and provided not a single new policy or fresh initiative to create new jobs or to spur enterprise and growth.
Overwhelmingly, people recognise that the country is in a hole. Everyone knows it and the Chancellor has even said it. Hardly a soul does not realise that, in the long term, we cannot live with the public sector financial deficit we have now. People know that difficult decisions have to be taken; they do not expect anything else. However, they do expect the Government to accept responsibility and to take action to get the economy moving. They expect the Government to respond vigorously and imaginatively to the crisis of unemployment. Above all, they expect the Government to be fair on the tax measures that they take. On all those counts, the Government have failed and the Finance Bill deserves to fail as well.

Mr. Nicholas Brown: The Chief Secretary to the Treasury opened this debate by referring to the views of the Organisation for Economic Co-operation and Development. He treated us to a fairly partial run through the OECD's views of the British economy before describing himself as odious. In returning to those aspects of the OECD's review of the British economy which the Chief Secretary overlooked, I should like to draw the attention of the House to the OECD's review, which it instigated and reported on in its publication "Economic Outlook", in which it considered the health of the public sector in all OECD countries.
One would not have learnt this from the Chief Secretary's contribution to the debate, but the OECD found in its review that the United Kingdom compares very unfavourably with other OECD countries. Between 1989 and 1993, the United Kingdom's deficit widened by

more than 9 per cent. of GDP, and that is more than that of any other G7 country. That point puts the Chief Secretary's remarks in context.
The unique depth and duration of the United Kingdom's recession are clearly partly responsible for that state of affairs, although I know that it is fashionable—and probably obligatory—for Conservative Members to blame the world recession for the shrinkage of the British economy.
The OECD estimates that 2·6 per cent. of GDP—about one third of the deficit—is a result of the recession. However, when the Chief Secretary was asked to quote even the broadest of estimates for those figures, he declined to do so. He could at least have quoted the OECD in that respect as he was keen enough to quote it on other matters. The OECD estimate would leave a PSBR of 5·7 per cent. of GDP which is structural. That means that the borrowing will remain even when the economy recovers. That structural deficit is a measure of the health of public sector finances, purged of the effects of short-term economic cycles. That is worse in the United Kingdom than in any other G7 country bar Italy. That is the problem which the Budget attempts to address.
Conservative Members always ask what Labour would do in such circumstances. I will answer that not by saying what Labour would do in the future, but by saying what Labour has done in the past. The problem has been made substantially worse by tax cuts of £6 billion given in 1988 and tax cuts of a further £2 billion to which we were treated in 1992 before the general election. Labour believed then, and we believe now, that those tax cuts were beyond what public finances could afford, and the blame for that lies with the Government and with no one else.
If people want to know what we said at the time, I can tell them that we voted against those measures. That is a matter of public record. A Labour Government would not have got us into the position into which the present Conservative Government have got us.
As my hon. Friend the Member for Coventry, South-East (Mr. Cunningham) pointed out, before the last election the Government said that the economy would grow by 2 per cent. in 1992–93, by 3·25 per cent. this year, by 3·75 per cent. next year and by 3·5 per cent. in 1995–96. The Red Book this year showed that the economy was stagnant for 1992–93. It forecast growth of just 2 per cent. this year, 2–5 per cent. next year and 2·75 per cent. for each year after that.
The Government boast of recovery and revise the forecasts down. The Government promised recovery and they now show that the economy did not grow for a year. The Government promised vigorous economic growth for the next five years, but they now say that the economy will be just 2 per cent. larger this year rather than the 5·25 per cent. promised last year. The Government have cut their forecast for the size of the economy in 1996–97 by 7 per cent., or some £55 billion.
That £55 billion means that the economy will be poorer by the equivalent of £1,000 a year for every man, woman and child in the country. Those are not short-term forecasts subject to the inevitable uncertainties arising from the vagaries in economic cycles. Those changes reflect a fundamentally different view about the capacity of the United Kingdom economy to grow and to improve living standards and pay for public services.
Last year the Government's figures showed a public sector borrowing requirement of £32 billion for the current


year; the Red Book shows that the Government now expect to borrow £50 billion. Last year, the Government showed the deficit declining to £6 billion in 1996–97. The Government said that there would be no need to cut spending or raise taxes and that the public finances would return to balance as the economy followed the recovery that I have just outlined. It has already been revealed that the £6 billion was massaged downwards on the orders of the former Chancellor, but now we are told that the borrowing required will be £46 billion if the Government do not raise taxes.
My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) has pointed out that the Government painted a false picture last year. The Government said that the economy would recover; it did not do so for another year. The Government said that recovery would be vigorous; now they take a significantly gloomier view of growth prospects. The Government said that taxes would not need to be raised. Now, in line with the new realism about economic growth that the Chief Secretary treated us to earlier, he has said that taxes need to be increased.
As my hon. Friend the Member for Ashfield (Mr. Hoon) pointed out, the Conservatives were not content with lying about our tax policies before the general election; they comprehensively lied about their own.
The Chief Secretary, in opening the debate, asserted that the Budget was broadly distributionally neutral, with the average proportion of income lost equal across income deciles at around 2·5 per cent. But 2·5 per cent. of income is of differing importance to the poorest and richest groups in society. Is it not disproportionate to ask the rich and poor alike for the same proportion of their income to reduce the deficit?
Contrasting the distributional effects of what happens when the Government need to raise tax rather than cut it, surely it is right to assert that they have increased national insurance contributions when they have cut income tax. Individuals start to pay national insurance contributions on earnings at least £1,000 lower than those on which income tax is paid. The Government have frozen income tax allowance, which raises money from people on the lowest incomes, when they have cut the higher rates of tax.
All in all, the richest 10 per cent. of the population are now £4,500 a year better off after the tax and benefit changes since 1979, and the poorest 10 per cent. of our fellow citizens are actually £50 a year worse off.
None of this is popular, but it is typical of this Prime Minister's decision making that, when he was faced with an unpopular Chancellor and an unpopular Budget, he got rid of the Chancellor and kept the Budget.
My hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) has pointed out that the Government have cynically dressed up the extension of VAT to domestic fuel as an environmental measure. The truth of the matter is that it is nothing more than a large tax rise. VAT on fuel is the most regressive extension of the VAT base. Before knock-on effects and compensation, it will raise 2 per cent. of net income from the poorest 10 per cent, and less than 0·5 per cent. from the richest 10 per cent. I ask even Conservative hon. Members, how can that be fair? At least some Conservative Members realised last night that it was not fair, and, very bravely, they voted with us in the Lobby to assert what one of them described as social justice. I noticed that his colleagues stared at him as if he had said something peculiarly offensive. Perhaps

the Conservative party does regard social justice as something peculiarly offensive, but I bet that the electors of Christchurch do not.

Mr. Dorrell: They are not voting for the hon. Gentleman.

Mr. Brown: I am not standing in the election. I prefer the climate in Newcastle.
As domestic heat and light are necessities, fuel consumption will not be cut by much as a result of this tax rise. If anyone is still giving the argument about the environment any credence, he cannot plausibly argue that the tax increase will do much to reduce the emissions of CO, in line with the United Nations climate for change convention. As my hon. Friend the Member for Darlington (Mr. Milburn) has pointed out, the changes hit the poorest the hardest.
My hon. Friend the Member for Hartlepool (Mr. Mandelson) asked who gains and who loses in this year's Finance Bill. If the Government decided to have their legislation financially sponsored rather than the arrangements that pertain at present, this could be known as the British Petroleum Finance Bill. The petroleum industry would be happy to acknowledge sponsorship of this year's measures.
The heads of foreign states have also gained from the Bill. Those with an interest in foreign affairs will be pleased to learn that they remain relieved of any obligation to pay tax on their British income. The hereditary rulers of Brunei, Saudi Arabia, Dubai and Oman are now treated more favourably than our sovereign, but they gave large sums of money to the Conservative party and our sovereign did not—[interruption.] Is the Chief Secretary trying to assert that Her Gracious Majesty gave money to the Conservative party, because I cannot believe it? I must have misheard that sedentary intervention.
The Bill makes a small concession to wealthy foreigners with tax-exempt status. If Asil Nadir were to return to this country, he would benefit from that little £10 million change to our tax regime. The British people, who have not contributed generously enough on a voluntary basis to Conservative party funds, are subject to a massive tax rise.
In a previous Third Reading speech on the Finance Bill I said that discussing the Finance Bill without the right hon. Member for Kingston upon Thames (Mr. Lamont) would be like discussing Hamlet without the ham. This will be the last Bill where we discuss the Budget with the right hon. Gentleman. Personally, I regret his passing. It is probably worth pointing out that that is the first nice thing that has been said about the right hon. Gentleman in the entire debate. What an astonishing legacy for a former Chancellor that not a single Conservative Member has said something nice about him.

Mr. Duncan: I did.

Mr. Brown: The hon. Gentleman protests his innocence, although I am not sure that it would be regarded as innocence by his colleagues in the Treasury. I hope that he will be rewarded with being forgiven with the passage of time.
It is sad that hon. Members who followed the Chancellor loyally through the Division Lobbies on the Budget could not find a decent word to say for him when discussing the legislation that he has brought to fruition.


His epitaph is not a single kind word from Conservative Members, even from his loyal deputy, the Chief Secretary to the Treasury.
The Bill includes value added tax on fuel; ACT changes hitting charities and pension funds; a 1 per cent. increase in employees' national insurance contributions; the non-indexation of allowances; restricting mortgage tax relief and married couples allowances to the new 20 per cent. band; and significant new increases in excise duties, notably on petrol and cigarettes.
Tonight we are invited not just to acknowledge the extent of the Government's mismanagement of the economy but to pay for it. I suggest that my hon. Friends reject that invitation.

Mr. Dorrell: First, I wish to respond to the comment of the hon. Member for Newcastle upon Tyne, East (Mr. Brown) about my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont). The most eloquent testimony of my hon. Friends' support for the Budget introduced by my right hon. Friend is for them to support the Third Reading tonight. I have not the slightest doubt that they will all take the opportunity to record their support for the Budget proposals tabled by my right hon. Friend on 16 March.
The Third Reading debate is the end of a long process in which the House and the Standing Committee considered the proposals tabled by my right hon. Friend on 16 March. My hon. Friend the Member for Slough (Mr. Watts) spoke about the petroleum revenue tax—one of the major tax proposals contained in the Budget. It has properly detained the Committee of the whole House and the Standing Committee as we have ensured that the issue is properly addressed. The concerns expressed within the oil industry and oil supply industries were also properly discussed.
It is true to say of my hon. Friend the Member for Slough and my right hon. Friend the Member for Woking (Sir C. Onslow), who has also taken a keen interest in the subject, that they accept, as do the vast majority of those actively involved in the oil industry, the objective of seeking to remove the distortions that the existing system of high rate and narrow base imposes on the oil industry through petroleum revenue tax. That objective is common ground.
As the Bill has proceeded, we have had considerable discussions on the nature of the transition arrangements which secure the transition from where we are now to where we all want to be. In the course of the Bill's consideration, the Government have sought to respond to the concerns expressed about the transition arrangements, not least by my hon. Friend the Member for Slough. The time has come to record the fact that, as the House has decided matters and the Bill has proceeded, it has become clear that there is a difference of opinion about the desirability of any further action on transitional arrangements. The House has made a decision in favour of the transition arrangements contained in the Bill.

Mr. Robert Hughes: Does the Minister understand the deep sense of betrayal felt in the oil industry this morning about the events over the weekend? Can he give a clear answer to the following question: at his meeting with his

right hon. and hon. Friends on Thursday night, did he give a hint that he was likely to change his mind? If the answer is no, the placing of the amendments on the amendment paper was duplicitous, and if the answer is yes, he was being duplicitous.

Mr. Dorrell: There is nothing duplicitous about placing amendments on the amendment paper. I listened to the representations made by my hon. Friends and undertook—as I should in the circumstances—to report and discuss those representations with my right hon. and learned Friend the Chancellor of the Exchequer. After the argument on the issue, it is important for us to be clear about matters.
The Government believe that the position set out in the Bill, on both the transition arrangements and the final objective, will endure in the long term. I can think of no perception more likely to undermine exploration and appraisal activity in the short term than the perception—if allowed to develop—that the Government may be about to reconsider the issues. That would be a powerful incentive for oil companies to delay exploration and appraisal until a future date when exploration and appraisal relief may be available. The Government have no plans to revisit the issue. We believe that the proposals contained in the Bill will endure, and when the results are clear our judgments will be vindicated.
We have agreed to look again at the narrow issue of the treatment of pipelines. We make no commitment, except in the broadest sense of maintaining the tax system—which is our continuing duty—to look again at any of the other issues relating to that subject contained in the Bill.

Mr. Salmond: The Minister knows all about undermining confidence in the oil industry. He said a few seconds ago that the House had made a decision on the subject. The House has had no opportunity, subsequent to the Government's refusal to make a concession in Committee, to make a decision on the subject, other than to vote in a few minutes' time.

Mr. Dorrell: The House has considered the matter both in Committee of the whole House and in Standing Committee.
As the Third Reading of the debate has unfolded, I have listened to speeches from right hon. and hon. Members on both sides of the House. One factor which has become clear to me, particularly from the speeches of Opposition Members, is that not a single Opposition Member has made any serious reference to the fact that there are clear signs that recovery is under way in the British economy, as my right hon. Friend the Chief Secretary made clear in his opening speech on Third Reading.
That perspective was almost totally lacking in the speeches made by Labour Members. One listened in vain to their speeches to hear a reference to the survey of the Confederation of Business Industry, which records the best sentiment among British business men since April 1983. One listened in vain to hear about the increase in retail sales of 3 per cent. over the past 12 months. One listened in vain for a reference to the increase in car registrations, which are up by 6·5 per cent. over the past 12 months.
Despite Labour Members' protestations of interest in the manufacturing sector, one listened in vain to them for a reference to the fact that manufacturing output has been


increasing for 12 months but has now reversed in the first five months of this year to more than half of the total loss of manufacturing output in the recession. Despite all the occasions over the years on which Labour Members have said that unemployment is the key factor, one listened in vain to their speeches for a single reference to the fact that unemployment has fallen in the past four months. That is good news, but reference was not made to it by Labour Members. I have further bad news for them—

Mr. Robert Ainsworth: Will the hon. Gentleman give way?

Mr. Dorrell: I will not give way.
The further bad news is that we intend that the recovery which is under way, and to which Labour Members did not refer, will be sustained because the Government are determined to deliver the disciplines that will ensure that it is sustained.
I refer to the discipline of sound money. The hon. Member for Peckham (Ms Harman) has taken to quoting my speeches back at me. That is great flattery. Because she repeatedly quotes from my speech about the dangers of inflation, I can only assume that she agrees with those dangers. For example, I assume that she agrees that inflation causes economic waste by giving inaccurate signals and introducing short-term planning horizons.
I assume that the hon. Lady agrees that inflation causes social injustice, which ensures that the system does not reward those who produce—it rewards those with the sharpest elbows. Inflation is a tax on the unsophisticated, to the benefit of the sophisticated. I am pleased to welcome her support for those propositions.
The hands of Labour Members are not clean on the subject of inflation—far from it. In the 1970s, the Labour Government were responsible for an average inflation rate of 15 per cent. during their years in office. What were they doing from 1986 to 1988 when the misjudgments which we acknowledge were being made led to an excess inflation rate? They were busy winding the handle that distributed the seeds of the harvest that came later.
In those years, what was Labour Members' formula for interest rates? They travelled the country telling us that interest rates should be fixed by a simple formula—X minus 2 per cent. when X was the prevailing interest rate. Whatever the interest rate, they wanted to see it cut. They did not see the dangers of inflation. If we had followed their nostrums, we would have made the matter worse.
In sharp contrast to that world, the Government have delivered the sound money and price stability objective that is the necessary precondition to sustainable growth. We have also made it clear that we will deliver sound public finance. That is the second discipline, which Labour Members talk about but on which we act. How would a Labour Government deliver sound public finance? It would not be through tax increases. The hon. Member for Dunfermline, East (Mr. Brown) shut and locked that door before the Budget when he said that to raise income tax, national insurance or VAT at that time would be a mistake. How would a Labour Government close the Budget deficit? Would the hon. Gentleman look to the hon. Member for Peckham? Would the whole burden rest on her? She wants more money for hospitals, schools, training and overseas aid. Under her, a spending round would be not so much a spending round as an auction.
The Bill lies at the heart of the difference between the parties. Others talk about the deficit. They recognise that it threatens sustainable recovery, but when asked what they would do about it, answer comes there none. The hon. Member for Dagenham (Mr. Gould) said of his party:
We have failed to come up with an alternative analysis.
That is the luxury of opposition—sound-bite populism, the opportunity to be all things to all men. Labour Members have forgotten the dictum of Aneurin Bevan:
The language of socialism is the religion of priorities.
The modern Labour party has lost its faith. The world in which Labour Members live is not the real world. The House knows it and the British people know it, which is why the British people have consistently rejected the plausible blandishments of the Opposition.
The Bill represents the Government's continuing commitment to deliver the disciplines which are the precondition of economic success, and I commend it to the House.

Question put, That the Bill be now read the Third time—

The House divided: Ayes 311, Noes 274.

Division No. 331]
[10.00 pm


AYES


Ainsworth, Peter (East Surrey)
Carttiss, Michael


Aitken, Jonathan
Cash, William


Alexander, Richard
Channon, Rt Hon Paul


Alison, Rt Hon Michael (Selby)
Churchill, Mr


Allason, Rupert (Torbay)
Clappison, James


Amess, David
Clark, Dr Michael (Rochford)


Ancram, Michael
Clarke, Rt Hon Kenneth (Ruclif)


Arbuthnot, James
Clifton-Brown, Geoffrey


Arnold, Jacques (Gravesham)
Coe, Sebastian


Arnold, Sir Thomas (Hazel Grv)
Colvin, Michael


Ashby, David
Congdon, David


Aspinwall, Jack
Conway, Derek


Atkins, Robert
Coombs, Anthony (Wyre For'st)


Atkinson, David (Bour'mouth E)
Coombs, Simon (Swindon)


Atkinson, Peter (Hexham)
Cope, Rt Hon Sir John


Baker, Rt Hon K. (Mole Valley)
Couchman, James


Baker, Nicholas (Dorset North)
Cran, James


Baldry, Tony
Currie, Mrs Edwina (S D'by'ire)


Banks, Matthew (Southport)
Curry, David (Skipton & Ripon)


Banks, Robert (Harrogate)
Davies, Quentin (Stamford)


Bates, Michael
Davis, David (Boothferry)


Batiste, Spencer
Day, Stephen


Bellingham, Henry
Deva, Nirj Joseph


Bendall. Vivian
Devlin, Tim


Beresford, Sir Paul
Dickens, Geoffrey


Biffen, Rt Hon John
Dicks, Terry


Blackburn, Dr John G.
Dorrell, Stephen


Body, Sir Richard
Douglas-Hamilton, Lord James


Bonsor, Sir Nicholas
Dover, Den


Booth, Hartley
Duncan, Alan


Boswell, Tim
Duncan-Smith, Iain


Bottomley, Peter (Eltham)
Dunn, Bob


Bottomley, Rt Hon Virginia
Durant, Sir Anthony


Bowden, Andrew
Dykes, Hugh


Bowis, John
Eggar, Tim


Boyson, Rt Hon Sir Rhodes
Elletson, Harold


Brandreth, Gyles
Emery, Rt Hon Sir Peter


Brazier, Julian
Evans, David (Welwyn Hatfield)


Bright, Graham
Evans, Jonathan (Brecon)


Brown, M. (Brigg & Cl'thorpes)
Evans, Nigel (Ribble Valley)


Browning, Mrs. Angela
Evans, Roger (Monmouth)


Bruce, Ian (S Dorset)
Evennett, David


Budgen, Nicholas
Faber, David


Burns, Simon
Fabricant, Michael


Burt, Alistair
Fairbairn, Sir Nicholas


Butcher, John
Fenner, Dame Peggy


Butler, Peter
Field, Barry (Isle of Wight)


Carlisle, John (Luton North)
Fishburn, Dudley


Carlisle, Kenneth (Lincoln)
Forman, Nigel


Carrington, Matthew
Forsyth, Michael (Stirling)






Forth, Eric
Lyell, Rt Hon Sir Nicholas


Fowler, Rt Hon Sir Norman
MacGregor, Rt Hon John


Fox, Dr Liam (Woodspring)
MacKay, Andrew


Fox, Sir Marcus (Shipley)
Maclean, David


Freeman, Rt Hon Roger
McLoughlin, Patrick


French, Douglas
McNair-Wilson, Sir Patrick


Fry, Peter
Madel, David


Gale, Roger
Maitland, Lady Olga


Gallie, Phil
Major, Rt Hon John


Gardiner, Sir George
Malone, Gerald


Garnier, Edward
Mans, Keith


Gill, Christopher
Marland, Paul


Gillan, Cheryl
Marlow, Tony


Goodson-Wickes, Dr Charles
Marshall, John (Hendon S)


Gorman, Mrs Teresa
Marshall, Sir Michael (Arundel)


Gorst, John
Martin, David (Portsmouth S)


Grant, Sir Anthony (Cambs SW)
Mates, Michael


Greenway, Harry (Ealing N)
Mawhinney, Dr Brian


Greenway, John (Ryedale)
Mayhew, Rt Hon Sir Patrick


Griffiths, Peter (Portsmouth, N)
Mellor, Rt Hon David


Grylls, Sir Michael
Merchant, Piers


Gummer, Rt Hon John Selwyn
Milligan, Stephen


Hague, William
Mills, Iain


Hamilton, Rt Hon Archie (Epsom)
Mitchell, Andrew (Gedling)


Hamilton, Neil (Tatton)
Mitchell, Sir David (Hants NW)


Hampson, Dr Keith
Moate, Sir Roger


Hanley, Jeremy
Monro, Sir Hector


Hannam, Sir John
Montgomery, Sir Fergus


Hargreaves, Andrew
Moss, Malcolm


Harris, David
Needham, Richard


Haselhurst, Alan
Neubert, Sir Michael


Hawkins, Nick
Newton, Rt Hon Tony


Hawksley, Warren
Nicholls, Patrick


Hayes, Jerry
Nicholson, David (Taunton)


Heald, Oliver
Nicholson, Emma (Devon West)


Heathcoat-Amory, David
Norris, Steve


Hendry, Charles
Onslow, Rt Hon Sir Cranley


Hicks, Robert
Oppenheim, Phillip


Higgins, Rt Hon Sir Terence L.
Ottaway, Richard


Hill, James (Southampton Test)
Page, Richard


Hogg, Rt Hon Douglas (G'tham)
Paice, James


Horam, John
Patnick, Irvine


Hordern, Rt Hon Sir Peter
Pattie, Rt Hon Sir Geoffrey


Howard, Rt Hon Michael
Pawsey, James


Howarth, Alan (Strat'rd-on-A)
Peacock, Mrs Elizabeth


Howell, Rt Hon David (G'dford)
Pickles, Eric


Howell, Sir Ralph (N Norfolk)
Porter, Barry (Wirral S)


Hughes Robert G. (Harrow W)
Porter, David (Waveney)


Hunt, Sir John (Ravensbourne)
Portillo, Rt Hon Michael


Hunter, Andrew
Redwood, Rt Hon John


Hurd, Rt Hon Douglas
Renton, Rt Hon Tim


Jack, Michael
Richards, Rod


Jackson, Robert (Wantage)
Riddick, Graham


Jenkin, Bernard
Rifkind, Rt Hon. Malcolm


Jessel, Toby
Robathan, Andrew


Johnson Smith, Sir Geoffrey
Roberts, Rt Hon Sir Wyn


Jones, Gwilym (Cardiff N)
Robertson, Raymond (Ab'd'n S)


Jones, Robert B. (W Hertfdshr)
Robinson, Mark (Somerton)


Key, Robert
Roe, Mrs Marion (Broxbourne)


Kilfedder, Sir James
Rowe, Andrew (Mid Kent)


King, Rt Hon Tom
Rumbold, Rt Hon Dame Angela


Kirkhope, Timothy
Ryder, Rt Hon Richard


Knapman, Roger
Sackville, Tom


Knight, Mrs Angela (Erewash)
Sainsbury, Rt Hon Tim


Knight, Greg (Derby N)
Scott, Rt Hon Nicholas


Knight, Dame Jill (Bir'm E'st'n)
Shaw, David (Dover)


Kynoch, George (Kincardine)
Shaw, Sir Giles (Pudsey)


Lait, Mrs Jacqui
Shephard, Rt Hon Gillian


Lamont, Rt Hon Norman
Shepherd, Colin (Hereford)


Lang, Rt Hon Ian
Shepherd, Richard (Aldridge)


Lawrence, Sir Ivan
Shersby, Michael


Legg, Barry
Sims, Roger


Leigh, Edward
Skeet, Sir Trevor


Lennox-Boyd, Mark
Smith, Tim (Beaconsfield)


Lester, Jim (Broxtowe)
Speed, Sir Keith


Lidington, David
Spencer, Sir Derek


Lilley, Rt Hon Peter
Spicer, Sir James (W Dorset)


Lloyd, Peter (Fareham)
Spicer, Michael (S Worcs)


Lord, Michael
Spink, Dr Robert


Luff, Peter
Spring, Richard





Sproat, Iain
Vaughan, Sir Gerard


Squire, Robin (Hornchurch)
Viggers, Peter


Stanley, Rt Hon Sir John
Waldegrave, Rt Hon William


Steen, Anthony
Walden, George


Stephen, Michael
Waller, Gary


Stern, Michael
Ward, John


Stewart, Allan
Wardle, Charles (Bexhill)


Streeter, Gary
Waterson, Nigel


Sumberg, David
Watts, John


Sweeney, Walter
Wells, Bowen


Sykes, John
Whitney, Ray


Tapsell, Sir Peter
Whittingdale, John


Taylor, Ian (Esher)
Widdecombe, Ann


Taylor, John M. (Solihull)
Wiggin, Sir Jerry


Taylor, Sir Teddy (Southend, E)
Wilkinson, John


Temple-Morris, Peter
Willetts, David


Thomason, Roy
Wilshire, David


Thompson, Sir Donald (C'er V)
Winterton, Mrs Ann (Congleton)


Thompson, Patrick (Norwich N)
Winterton, Nicholas (Macc'f'ld)


Thornton, Sir Malcolm
Wolfson, Mark


Thurnham, Peter
Wood, Timothy


Townend, John (Bridlington)
Yeo, Tim


Townsend, Cyril D. (Bexl'yh'th)
Young, Rt Hon Sir George


Tracey, Richard



Tredinnick, David
Tellers for the Ayes:


Trend, Michael
Mr. David Lightbown and Mr. Sydney Chapman.


Trotter, Neville



Twinn, Dr Ian





NOES


Abbott, Ms Diane
Clelland, David


Adams, Mrs Irene
Clwyd, Mrs Ann


Ainger, Nick
Coffey, Ann


Ainsworth, Robert (Cov'try NE)
Cohen, Harry


Allen, Graham
Connarty, Michael


Alton, David
Cook, Frank (Stockton N)


Anderson. Donald (Swansea E)
Cook, Robin (Livingston)


Anderson, Ms Janet (Ros'dale)
Corbett, Robin


Armstrong, Hilary
Corbyn, Jeremy


Ashdown, Rt Hon Paddy
Corston, Ms Jean


Ashton, Joe
Cousins, Jim


Austin-Walker, John
Cox, Tom


Banks, Tony (Newham NW)
Cryer, Bob


Barnes, Harry
Cummings, John


Barron, Kevin
Cunliffe, Lawrence


Battle, John
Cunningham, Jim (Covy SE)


Bayley. Hugh
Cunningham, Rt Hon Dr John


Beckett, Rt Hon Margaret
Dalyell, Tam


Beggs, Roy
Darling, Alistair


Beith, Rt Hon A. J.
Davidson, Ian


Bell, Stuart
Davies, Bryan (Oldham C'tral)


Benn, Rt Hon Tony
Davies, Rt Hon Denzil (Llanelli)


Bennett, Andrew F.
Davies, Ron (Caerphilly)


Benton, Joe
Davis, Terry (B'ham, H'ge H'l)


Bermingham, Gerald
Dewar, Donald


Berry, Dr. Roger
Dixon, Don


Betts, Clive
Dobson, Frank


Boateng, Paul
Donohoe, Brian H.


Boyce, Jimmy
Dowd, Jim


Boyes, Roland
Dunnachie, Jimmy


Bradley, Keith
Dunwoody, Mrs Gwyneth


Bray, Dr Jeremy
Eagle, Ms Angela


Brown, Gordon (Dunfermline E)
Eastham, Ken


Brown, N. (N'c'tle upon Tyne E)
Enright, Derek


Burden, Richard
Etherington, Bill


Byers, Stephen
Evans, John (St Helens N)


Caborn, Richard
Ewing, Mrs Margaret


Callaghan, Jim
Fatchett, Derek


Campbell, Mrs Anne (C'bridge)
Faulds, Andrew


Campbell. Menzies (Fife NE)
Field, Frank (Birkenhead)


Campbell, Ronnie (Blyth V)
Fisher, Mark


Campbell-Savours, D. N.
Flynn, Paul


Canavan, Dennis
Forsythe, Clifford (Antrim S)


Cann, Jamie
Foster, Rt Hon Derek


Carlile, Alexander (Montgomry)
Foster, Don (Bath)


Chisholm, Malcolm
Foulkes, George


Clapham, Michael
Fraser, John


Clark, Dr David (South Shields)
Fyfe, Maria


Clarke, Eric (Midlothian)
Galloway, George


Clarke. Tom (Monklands W)
Gapes. Mike






Garrett, John
Jones, Lynne (B'ham S O)


George, Bruce
Jones, Martyn (Clwyd, SW)


Gerrard, Neil
Jowell, Tessa


Gilbert, Rt Hon Dr John
Keen, Alan


Godman, Dr Norman A.
Kennedy, Charles (Ross,C&S)


Godsiff, Roger
Kennedy, Jane (Lpool Brdgn)


Golding, Mrs Llin
Khabra, Piara S.


Gordon, Mildred
Kilfoyle, Peter


Gould, Bryan
Kinnock, Rt Hon Neil (Islwyn)


Graham, Thomas
Leighton, Ron


Grant, Bernie (Tottenham)
Lestor, Joan (Eccles)


Griffiths, Nigel (Edinburgh S)
Lewis, Terry


Griffiths, Win (Bridgend)
Litherland, Robert


Grocott, Bruce
Livingstone, Ken


Gunnell, John
Lloyd, Tony (Stretford)


Hain, Peter
Llwyd, Elfyn


Hall, Mike
Loyden, Eddie


Hanson, David
Lynne, Ms Liz


Hardy, Peter
McAllion, John


Harman, Ms Harriet
McAvoy, Thomas


Harvey, Nick
McCartney, Ian


Hattersley, Rt Hon Roy
Macdonald, Calum


Heppell, John
McKelvey, William


Hill, Keith (Streatham)
McLeish, Henry


Hinchliffe, David
McMaster, Gordon


Hoey, Kate
McNamara, Kevin


Hogg, Norman (Cumbernauld)
Madden, Max


Home Robertson, John
Mahon, Alice


Hood, Jimmy
Mandelson, Peter


Hoon, Geoffrey
Marek, Dr John


Howarth, George (Knowsley N)
Marshall, David (Shettleston)


Howells, Dr. Kim (Pontypridd)
Marshall, Jim (Leicester, S)


Hoyle, Doug
Martlew, Eric


Hughes, Kevin (Doncaster N)
Maxton, John


Hughes, Robert (Aberdeen N)
Meacher, Michael


Hughes, Roy (Newport E)
Meale, Alan


Hughes, Simon (Southwark)
Michie, Bill (Sheffield Heeley)


Hutton, John
Michie, Mrs Ray (Argyll Bute)


Ingram, Adam
Milburn, Alan


Jackson, Glenda (H'stead)
Miller, Andrew


Jackson, Helen (Shef'ld, H)
Mitchell, Austin (Gt Grimsby)


Jamieson, David
Molyneaux, Rt Hon James


Janner, Greville
Moonie, Dr Lewis


Johnston, Sir Russell
Morgan, Rhodri


Jones, Barry (Alyn and D'side)
Morley, Elliot


Jones, leuan Wyn (Ynys Môn)
Morris, Rt Hon A. (Wy'nshawe)





Morris, Estelle (B'ham Yardley)
Short, Clare


Morris, Rt Hon J. (Aberavon)
Simpson, Alan


Mowlam, Marjorie
Skinner, Dennis


Mudie, George
Smith, Andrew (Oxford E)


Mullin, Chris
Smith, C. (Isl'ton S & F'sbury)


Murphy, Paul
Smith, Llew (Blaenau Gwent)


Oakes, Rt Hon Gordon
Smyth, Rev Martin (Belfast S)


O'Brien, Michael (N W'kshire)
Snape, Peter


O'Brien, William (Normanton)
Soley, Clive


O'Hara, Edward
Spearing, Nigel


Olner, William
Spellar, John


O'Neill, Martin
Steel, Rt Hon Sir David


Patchett, Terry
Steinberg, Gerry


Pendry, Tom
Stevenson, George


Pickthall, Colin
Strang, Dr. Gavin


Pike, Peter L.
Taylor, Rt Hon John D. (Strgfd)


Powell, Ray (Ogmore)
Taylor, Matthew (Truro)


Prentice, Ms Bridget (Lew'm E)
Tipping, Paddy


Prentice, Gordon (Pendle)
Turner, Dennis


Prescott, John
Tyler, Paul


Primarolo, Dawn
Vaz, Keith


Purchase, Ken
Walker, A. Cecil (Belfast N)


Quin, Ms Joyce
Walker, Rt Hon Sir Harold


Radice, Giles
Walley, Joan


Randall, Stuart
Wardell, Gareth (Gower)


Raynsford, Nick
Wareing, Robert N


Redmond, Martin
Watson, Mike


Reid, Dr John
Welsh, Andrew


Rendel, David
Wicks, Malcolm


Richardson, Jo
Wigley, Dafydd


Robertson, George (Hamilton)
Williams, Rt Hon Alan (Sw'n W)


Roche, Mrs. Barbara
Williams, Alan W (Carmarthen)


Rogers, Allan
Wilson, Brian


Rooker, Jeff
Winnick, David


Rooney, Terry
Wise, Audrey


Ross, Ernie (Dundee W)
Worthington, Tony


Ross, William (E Londonderry)
Wray, Jimmy


Rowlands, Ted
Wright, Dr Tony


Ruddock, Joan
Young, David (Bolton SE)


Salmond, Alex



Sheerman, Barry
Tellers for the Noes:


Sheldon, Rt Hon Robert
Mr. Eric Illsley and Mr. Andrew Mackinlay.


Shore, Rt Hon Peter

Question accordingly agreed to.

Bill read the Third time, and passed.

Education (Assisted Places)

The Parliamentary Under-Secretary of State for Schools (Mr. Eric Forth): I beg to move,
That the draft Education (Assisted Places) (Amendment) Regulations 1993, which were laid before this House on 29th June, be approved.
As hon. Members will know from debates in previous years, these draft amendment regulations are quite specific in their purpose. They are simple amendments to the principal regulations, which are the Education (Assisted Places) Regulations 1989. As such, I shall restrict my comments to these amendments only and will briefly explain their purpose to the House.
The amending regulations provide for the uprating of the parental contribution tables, which we have done on an annual basis since the inception of the scheme, and set out how much parents must pay towards their child's assisted place. There is also a small number of other technical amendments. I am sure that the House will find that the amendments I shall describe are quite straightforward.
Regulation 1 of the draft regulations deals with citation, commencement, application and interpretation. The regulations are to come into force on 27 August 1993.
Regulation 2 of the draft regulations increases the allowance made when calculating parents' total relevant income for each dependent child other than the assisted place holder. The amount is raised from £1,105 to £1,125—that is, by the same percentage which applies to the uprating of the parental contribution scales, to which I shall return in a moment. This allowance is helpful to parents with larger families, and uprating it will ensure that their position is not worsened.
Regulation 3 deals purely with technical amendments. They are necessary in order to keep the definition of "total parental income" for the purposes of the scheme in line with tax legislation. They also update the wording of the regulations to reflect current terminology—hence the need now to refer in the regulations to the new Child Support Agency.
I come now to the main purpose of setting these regulations before the House today. Regulation 4 sets out the income bands used for assessing parents' contributions towards fees. These bands have been uprated to take account of the movement in the retail prices index to April of this year—that is, by 1·9 per cent. The threshold at or below which parents pay nothing towards fees is raised from £9,056 to £9,225, with corresponding increases in the thresholds for higher percentage contributions from income. The effect of this amendment is that parents will not be asked to increase contributions above the rate of inflation. They will continue to contribute roughly the same proportion of their income as they did last year.
I believe that the House will find this to be an equitable measure, taking into account the fact that parents in the scheme earn considerably less than the national average income. Assistance under the scheme follows the principle that the lower the income, the greater the Government assistance should be. The threshold for full remission of fees, to which I have just referred, is set deliberately low so that the least well-off families benefit most. The scale then rises by a fairly steep curve so that better-off families get reduced, and eventually no, assistance. I believe this to be

right and in keeping with the aims of the scheme—to open doors of opportunity to those who would otherwise never be able to contemplate paying fees.

Mr. Roy Beggs: How many children in Great Britain are now benefiting from the assisted places scheme?

Mr. Forth: Approximately 27,000. I can give the hon. Gentleman a more precise figure later, if he wants one.
The provisions and amendments that I have just described are necessary technicalities to ensure the continued smooth running of the assisted places scheme, which is proving to be increasingly popular with parents, as is evidenced by the unprecedented rate of take-up in schools. Nevertheless, the Government continue to take steps to ensure that the scheme provides for a realistic contribution from both the taxpayer and the parents and, by restricting the level of fees that can be applied by schools to assisted pupils, a continuation of the part played by individual schools as partners with the Government in this very successful scheme.
I commend the regulations to the House.

Mr. Win Griffiths: These amending regulations provide us with an opportunity to look again at this running sore on the body educational. There is no doubt that this scheme remains wrong in principle. It is quite simply a subsidy to the private sector, as is recognised by many people.
This year, there are 21 private schools receiving more than £750,000 each, and seven receiving more than £1 million each. There are 63 schools with more than 20 per cent. of their pupils on the assisted places scheme: 13 have 30 per cent. of their pupils on the scheme, and in two schools the proportion is more than 40 per cent. The position was made quite clear as long ago as 1986, when the headmaster of King Edward's school, 200 of whose pupil—if my memory serves me well—are on the scheme, said:
It will not, therefore, surprise the reader if I defend the assisted places scheme. I believe that it is a good scheme. But I must be honest: it is a good scheme partly because it helps independent schools … While a very small minority of schools on the scheme—the Winchesters and Sedburghs—may indeed have no need of state support, the majority will have benefited considerably.
So the headmaster of an independent school sees this as a specific subsidy to his school.

Mr. Keith Mans: Does the hon. Gentleman agree that, contrary to what he has just said, this represents a saving to the state sector? The vast majority of children who take up the scheme would otherwise be educated in the state sector. The amount that the Government have to pay is smaller than the sum that would be involved if those children were being educated in state schools.

Mr. Griffiths: That is not true. Some years ago, even the Independent Schools Information Service drew attention to the fact that a place in an independent school cost over £200 more than one in a state school. Later information put the figure at £400. It is indeed a costly scheme, and a subsidy to the private sector. It is also a blatant attempt to cream off very able children from the maintained sector.

Mr. James Clappison: The hon. Gentleman mentioned King Edward's school. I presume that he means the one in Birmingham, which appeared on a list produced by one of his hon. Friends. The real point about schools such as King Edward's and Haberdashers' Aske's in my constituency is that they could fill the places with pupils whose parents were prepared to pay the fees. Certainly, Haberdashers' Aske's, King Edward's in Birmingham and, I suspect, many others on the scheme could fill the places many times over in that way but, as my hon. Friend the Minister said, they seek to open doors of opportunity for children whose parents are not able to afford the fees. That is what the scheme is doing, and the hon. Gentleman has no evidence to the contrary.

Mr. Griffiths: The hon. Gentleman has made a speech, responding to a point that I have not even made. My argument is that the assisted places cost the Government more money than places in maintained secondary schools and that it would be much better if the money were used to improve the facilities and increase the number of teachers in the state schools.
As I was saying before the hon. Gentleman's speech, the scheme is a blatant attempt to cream off very able children from the maintained sector. If the Government were truly concerned about the quality of education in the maintained sector, they would be doing everything possible to ensure that the policies were in place and the facilities and teachers available to make certain that all children could be educated to the best of their ability.
What is even worse, given the fact that there is a subsidy and an attempt to cream off the best pupils from the maintained schools, there is absolutely no evidence that the extra cost means better results. Her Majesty's inspectorate and the Audit Commission have examined the issues exhaustively and concluded that there is absolutely no evidence that pupils who go to such schools benefit in any way. In fact, when the scheme was introduced, John Rae, then headmaster of Westminster school, said:
The Scheme was based on a false premise: that an independent school was automatically a better place to educate a bright child.
Plainly, it is not, and the scheme is a waste of money.
The scheme encourages educational snobbery which undermines maintained schools. It provides opportunities for a few at the expense of the many.

Mr. Harry Greenway: It is a great pity that the hon. Gentleman knocks the education of poor children, because that is what he is doing. Is he aware that the assisted places scheme costs £95 million a year out of an education budget of £17 billion? If he thinks that children do not profit from the scheme he need only talk to poor parents in my constituency who will tell him the truth. Why should they not have the same opportunity as others?

Mr. Griffiths: It was the right hon. Member for Brent, North (Sir R. Boyson) who said that the scheme covered about 1 per cent. of all pupils. If the hon. Gentleman is really concerned about the education of poor children, why does he not ensure that the facility is available to every child? The scheme is highly selective. It would be far better if the Government gave every state school an extra £400

per pupil. We would then see what more could be achieved by that simple expedient, without encouraging such a highly divisive system.
The idea of helping poor children has failed on the Government's own objectives. In the Daily Mail on 25 June 1981, the right hon. Member for Brent, North said that he wanted the scheme to cater for able children from the poorest homes. Lord Joseph, then Secretary of State for Education and Science, said that he saw the scheme as a way of producing a greater social mix in independent schools. With the scheme helping only 1 per cent. of pupils, that plainly is not happening.
Although it is true that two thirds of pupils on the scheme come from families with below average incomes, a third come from families with above average incomes. If the Government were intent on helping the poorest families, they would divert all the help to those on below average incomes. What gives the game away is that well over half the parents of even those on low incomes went to independent or selective schools. So we have a self-generating scheme: those who know about it and are in a position to take advantage of it do so.
If the schools are so good, why do the Government not provide the extra money for all children? The plain fact is that they do not. Why do they not spend the money to help able pupils in maintained schools? The money would be put to much better use there. Why do they not use the money to provide more nursery school places? There is a well-established and well-researched link between the provision of good nursery education and better performance in schools. That would be a far more effective use of public moneys.
What is worse is that we are now seeing that the scheme is badly managed. In 1992 the spending has to be capped to a maximum increase of 12 per cent. In the maintained sector, an increase of only 7 per cent. was allowed. In 1990–91 there was a £3 million overspend, even though 17 per cent. of the places remained unfilled. In 1991–92 the scheme was almost £11 million over budget. This year it is estimated that there will be a £78 million outturn in the Department's expenditure plans. Next year the plan is to spend £95 million. However, on table 10 on page 16 of the same document, the Government say that there will be only 286 extra places next year, but they are spending £17 million more. If that is computed on a per capita basis, it is nearly £60,000 extra per place. I invite the Minister to check the figures and explain to me how I have misread the tables.

Mr. Andrew Rowe (Mid-Kent): Is the hon. Gentleman aware that there is likely to be a steep increase in demand for places from Kent, where the Liberals, who have just taken control with the assistance of the Labour party, have decided to cut, in maintained schools, the teaching of history, geography and English in favour of what they call "enhanced centres of experience"?

Mr. Griffiths: I am afraid that, on the Department's figures, there will be only 286 more places next year, so if the hon. Gentleman is right there will be a lot of disappointed parents in Kent.
The whole scheme shows the Government's belief that they have failed. They are in effect admitting that they do not think that the maintained sector offers a good enough education for able children, so they want them to go to the independent sector. Funnily enough, it was the hon.


Member for Buckingham (Mr. Walden) who described the assisted places scheme in February last year as a lifebelt for many a talented child. He added:
Although I am a Conservative I do have reservations about subsidising the independent sector for all time.
The point is that the money would be much better spent in the maintained sector.
Surplus places also come into the equation. Thirty-four of these schools have more than 200 pupils on the assisted

places scheme, so children are being taken away from the maintained schools in some boroughs and counties. It would be far better if the Government devoted the resulting extra resources to the maintained sector. The Government want to uprate the scheme so as to keep going their preferential treatment of a small minority of parents. That is deplorable. It shows up the ideological divide between us: the Government are intent on giving privileges to the very few while we believe that the money should be spent on extending opportunities for excellence in education to everybody.

Mr. George Walden: I am grateful to the hon. Member for Bridgend (Mr. Griffiths) for recalling some words that I uttered some time last year. Since the speech that he has just made was rather similar to speeches he has made before on these occasions, he will forgive me if I deliver a speech similar to the one I made last time.
Although I continue to approve of the assisted places scheme, we ought to keep an open mind and enter, perhaps, into a more sophisticated debate than is possible when phrases such as "running sore", "creaming off" and the like are used.
A figure that has struck me is to be found in a press release from the Department for Education dated 5 July. While we are spending £76 million on this wholly worthwhile scheme, we have put £50 million into our "successful technology schools initiative", of which I also approve.
The Minister says that the assisted places scheme provides parental choice, raises standards and extends opportunities. That is all true, but I would like a system that would not involve our subsidising the private schools. I would like a system like that in certain continental countries, where these things can be achieved in the places where the children actually live. That is my point about the Government's welcome technology schools initiative.
Ideally, we would not face the stark choice between comprehensivisation—86 per cent. of secondary schools are comprehensive—and the lifebelt of the assisted places scheme. That is a stark and artificial situation, and we have got ourselves into it through our mistaken educational philosophies over several decades, not including the last one.
We have to do what Wandsworth has done and fight our way out of that. We have to have "parental choice", "raising standards", "extending opportunities" in the locality, and that can be done only by providing a variety of different schools in one locality, with selection not by ability—let us put to one side the old-fashioned class debate—but by the method that they have in more sophisticated continental countries, by what the child shows that he has aptitude for.
There must be movement between schools—the system should not be set rock hard, because some children develop later than others. If the Government can find the money to expand not so much the assisted places scheme as the technology schools initiative, it is possible to foresee a time when, in many deprived, semi-deprived or just normal areas, there is a genuine choice for children, of all backgrounds, with different aptitudes. Children from deprived backgrounds may have an aptitude for academic, intellectual work. Some may have an aptitude for engineering. As we all know, that does not mean 19th-century engineering—it is a demanding business.
We can envisage different schools for those different children. There might also be a comprehensive school, and why not? There should be no dogmatism, no bar on having different types of school. If one is not a dogmatist, one cannot object in principle to having a comprehensive school. Why cannot there be three types of school?
I could go on for some time, but I would bore everyone if I did. However, I want to add one point about private schools. They have always worried me—not in themselves, because, despite what the hon. Member for Bridgend said, their methods are far more educationally sound than those

in many of the state schools—but because I dislike the social polarisation involved in the existence of private schools, which one sees in no other country to the same degree. It is a profoundly disturbing phenomenon. It continues, as the hon. Gentleman intimated, from generation to generation, which makes it even more profoundly disturbing.
One of the little thoughts that I should like to leave in the mind of my hon. Friend the Minister—

Mr. Rowe: Will my hon. Friend give way?

Mr. Walden: May I just finish this little thought before it slips my mind?
I am serious about the thought of buying out some private schools. We should never forget that there are some private schools that used to be direct grant schools—the equivalent of what we now call grant-maintained schools. They were forced by the activities of Labour Members or their predecessors into the private sector and are now closed to ordinary children.
I would like to see those schools, with all their traditions of excellence, come back into the state sector and be open to every child on a competitive basis, to go there without paying fees. Such a scheme would be the ultimate extension of the assisted places scheme, because everyone would have the chance to go to such schools.
Eton may not do that, but I have visited some former direct grant schools that would not be unattracted by the notion of selecting, free, from the brightest children, rather than having to take them from certain privileged and moneyed social classes, with a sprinkling of scholarships, as they do at present.

Mr. Rowe: Does my hon. Friend accept that one of the pressures for the continuation of private schools is the extraordinary difficulty which many maintained schools appear to have in retaining single sex education? Many parents want single sex education, and, in the case of girls, there is clear evidence that single sex education yields better results.

Mr. Walden: I hear what my hon. Friend says. I do not want to consider sex, although I know that that is a problem. One of the difficulties in our way of thinking in this country—I mean no offence to my hon. Friend the Member for Mid-Kent (Mr. Rowe)—is the tendency to go off at a tangent.
What I am trying to address, perhaps unsuccessfully, as it is very late at night, is a very central issue. I want diversification for everyone on the ground, locally, rather than the stark and artificial choice between being forced, nine times out of 10, to go to a comprehensive school, and being bailed out by the state in a wholly artificial and very expensive way to the tune of £76 million to give a child a chance in an almost certainly better and more demanding educational environment.
I believe that the whole process is artificial, and therefore fundamentally suspect. However, for the moment I can think of nothing better. Let us get on with the technology schools initiative. Where the money is to come from is a separate debate, although I have my ideas about that as well.

Mr. Gerry Steinberg: It is an absolute disgrace that, at a time when most state schools are struggling to find enough resources to pay for teachers, equipment, books and for essential repairs and when there is a lack of nursery places, the Government continue to fund private education from public funds. They not only continue to subsidise private schools: they intend to increase that subsidy tonight.
When the right hon. Member for Brent, North (Sir R. Boyson) was an Education Minister, he said that the scheme was intended for able children from the poorest homes. Why he thought able children from the poorest homes would want to go to public schools beats me—[HON. MEMBERS: "They do."] No, they do not. If Conservative Members listen to me, they will see that they do not.
Even if the right hon. Member for Brent, North was very sincere—I do not dispute that he was—he was wrong. The scheme is exploited by the middle class. Evidence and statistics clearly show that 60 per cent. of the children who benefit from the scheme have parents who are lawyers, civil servants, clergymen, teachers or other white collar workers. Only 10 per cent. of assisted places pupils come from working class parents and have fathers who are manual workers.
That is typical of the Government, and it epitomises their political philosophy. They subsidise the better-off at the expense of the less well-off. If parents want to send their children to public schools, that is their choice, but they should not do so at the expense of the vast majority of pupils in the state sector.
Let me give examples of the subsidies offered to parents wishing to send their children to Durham school, the well-known public school in my constituency. The annual fees for Durham school in 1991–92 were £5,638. A family earning £25,000 a year with one child on the assisted places scheme attending that school would have received a subsidy of £1,531. If the family had two children attending the school, it would have received a subsidy of £5,114 from the taxpayer. If a family earning £19,000 a year sent one child to the school, it would have received a subsidy of £3,500 a year. Should it have sent two children to that school, it would have received a subsidy of £8,000 a year from the public purse.
That is reprehensible. The state should not pay private schools large subsidies at a time when the state sector is strapped for resources. It should not pay subsidies to the private sector at any time, regardless of whether resources are scarce or not. The assisted places scheme is a deliberate attempt to subsidise the private sector and keep it viable.
Whether the scheme is being used by the middle class, the working class or, for that matter, any other class is irrelevant. The fact that that scheme is available in the first place is appalling. Money is being hived off from the state sector into private education at the expense of the state sector. That is what the scheme is all about.
It is a scandal that, this year, £95 million will be spent on the scheme. In 1995–96, that expenditure will increase to £106 million. In comparison, this year, the Government intend to spend just £131 million on the school building grant to the maintained sector, and plan to spend just £107 million on that grant in 1995–96. The Government plan to

spend as much money on the private sector as they plan to spend on that building grant. That must be wrong and immoral.
I would not care, but the scheme does not even offer value for money. As my hon. Friend the Member for Bridgend (Mr. Griffiths) said, it costs £400 a year more to educate a child in a private school than in the state sector. That difference is based on the figures provided by the Independent Schools Information Service, ISIS, which can hardly be regarded as an independent-minded organisation by any stretch of the imagination.
There is no evidence that children on the scheme do better in private schools than they would have done had they been educated in state schools. The evidence suggests the contrary. In 1991, the Audit Commission produced a report, "Two Bs or not", on the A-level performances in schools and colleges. It suggested that no single type of institution appeared consistently more effective than any other in terms of obtaining A-level results. It found, significantly, that private schools did marginally less well than the sixth forms and tertiary colleges of the state sector. It reported that pupils got better results in the state sector.
As the scheme produces no better results from the pupils who participate in it, and given that the scheme was not initially intended to assist pupils of a certain background, who account for the majority of its participants, one can only conclude that it is a device used by the Government to meet the increase in the private school fees. It is a subsidy to the private sector from the state purse.
I will conclude by quoting, once again, the right hon. Member for Brent, North.

Mr. James Pawsey: Hear, hear.

Mr. Steinberg: The hon. Gentleman should listen carefully to what that right hon. Gentleman said. He believed that the scheme had turned out to be a rescue for "distressed gentlefolk". He also suggested that it had taken the Tory party down a "side alley". I agree.
The Government have gone down a convenient side alley, because, through the scheme, they can subsidise private education. I suspect that that was always the intention.

Mr. Don Foster: Unlike some hon. Members, I do not wish to flex ideological muscles against the independent sector. Some independent schools can make a valuable contribution to education.
The hon. Member for Buckingham (Mr. Walden) said that he was not ashamed to refer to the speech that he made last year, and I feel exactly the same way. Last year, I said that I did not want to attack independent schools, and that some of them could contribute to education. In responding to the debate, the Under-Secretary of State accused me of trying to have it both ways, so my argument may not have been clear enough.
Considerable evidence proves that mutual benefit accrues from the independent and state sectors working together in certain areas. For instance, we are well aware that most trade unions and many professional education associations have joint membership from both sectors. The National Association for the Teaching of English, the


Association for Science Education and the Secondary Heads Association are just a few examples of organisations that are working to improve the quality of education for the nation's children. There are many examples of joint in-service activity and shared use of premises, and even some examples of joint teaching.
So co-operation to mutual advantage is possible, and Liberal Democrats are happy and willing to support it. However, we are not prepared to support measures that foster elitism in our society and prop up ailing independent schools to the disadvantage of pupils in the state sector. The assisted places scheme comes dangerously close on both counts.
Equally worrying is the fact that the assisted places scheme is not only badly managed but missing its target. Only 24 hours ago, the Government put VAT on domestic fuel to help pay off their £50 billion public sector debt, but today they do not seem concerned about wasting money on a scheme with little demonstrable benefit to taxpayers. Until recently, it was not even fully taken up. Furthermore, even the Minister will accept that the scheme was overspent by some £10 million.
Given that such straitened financial resources are available in state sector schools, how can we justify spending £8,595 of state money on sending pupils to Charterhouse school, for example? That money could have been far better directed towards hard-pressed state schools. It cannot be right that the assisted places scheme is being used to prop up some independent schools suffering from falling rolls due to the recession.
Notwithstanding what the hon. Member for Hertsmere (Mr. Clappison) said in his lengthy intervention, the figures show that questions must be asked. Can it be right that a high percentage of pupils at a number of independent schools come through the assisted places scheme? For example, 39·9 per cent. of Batley grammar school's pupils, 37·3 per cent. of Denstone college's pupils, 38·5 per cent. of Hereford Cathedral school's pupils, 44·8 per cent. of St. Edward's college's pupils, and nearly 50 per cent. of Wisbech grammar school's pupils come through the scheme.
As the hon. Member for Bridgend (Mr. Griffiths) said, in a single year some seven schools received more than £1 million and more than 50 schools received some £500,000 of taxpayers' money through the assisted places scheme. Perhaps even worse, that money is being spent with no apparent reference to standards, quality or value.
We all know that our state schools are required to teach the national curriculum—I suspect that many of them would prefer not to have to do so, given its nature. Those schools are required to be regularly inspected by Ofsted and are expected to conform to the requirements of standard assessment tests for their children. None of those requirements applies to the independent sector schools, to which state money is given to support the pupils.
The Under-Secretary of State used the argument that we should not invest money into schools that do not conform to those three criteria—the national curriculum, Ofsted inspections and SATs—during the passage of the Education Bill. At that time he used that argument to show why money should not be given to Steiner schools. We are presented with the strange anomaly whereby the Under-Secretary today supports state money being put into independent schools that do not conform to those requirements.
In a similar debate last year I challenged the Under-Secretary to provide evidence to the House of value for money for the scheme and added value. On both counts, he was silent, except to tell us that the independent schools produced good examination results. Even he was honest enough to go on to say that one would expect that, given the selection procedures that are adopted by those schools.
Last year, I referred to views expressed by the Library of the House, whose officials had studied all the various research conducted into the success of the assisted places scheme in meeting its intended target of providing assisted places to bright children from less well-off backgrounds. At that time, the Library concluded:
Much of the research on the operation of the scheme has suggested that it has failed in its prime aim of giving good education to children from relatively poor backgrounds and is mainly subsidising middle class parents.
That view was not challenged last year by the Minister. I hope that he will be prepared to do so now—or does he accept the view expressed by the Library?
We cannot support a scheme that is badly managed and misses its intended target. Therefore, we will vote against the provision tonight. In consultation with those in both sectors, the Liberal Democrats will continue to explore alternative approaches to co-operation between the sectors to mutual benefit.

Dr. Tony Wright: I welcome any scheme that seeks to nourish academically able children from disadvantaged backgrounds. However, the problem with the assisted places scheme is that it is such an impoverished and ideologically driven way of thinking about the subject that it fails to achieve that objective. In many respects, it is the original opt-out approach—it provides a subsidy to leave the system, rather than taking serious action to improve the system for the target group identified.
As we have heard from both sides of the House, the scheme fails even on its own terms. It is an expensive failure. We know that it currently costs nearly £76 million, and the cost is soon to rise again. It is overspent. It has take-up problems. Last year there were 5,671 vacant assisted places. Contrary to the claims that used to be made, the scheme now costs more per pupil than the maintained system. Various figures have been offered but the most recent ones given in parliamentary answers show that each assisted place now costs £3,100, compared with £2,195 in the maintained secondary sector. Therefore, one of the traditional claims for this scheme does not apply by a mile.
We were told that the scheme is failing to meet its claimed target. Much of the money is a subsidy to the lower middle class. Speaking as a member of the lower middle class, I am not entirely against that, although I cannot understand why my taxes should be used for that purpose. In 1989, a study funded by the Economic and Social Research Council reported that:
The scheme seems to have been yet another example of an educational reform targeted towards the working class but mainly benefiting children from middle-class backgrounds…Neither, in terms of the objectives that were originally defined for it or our own findings to date does there seem to be much scope or justification for extending it in its present form.


If hon. Members are unhappy with that finding, they should look at the Independent Schools Information Service survey that was commissioned from MORI last year. That survey found that 41 per cent. of children taking up assisted places came from lower middle-class families with only 16 per cent. coming from families of semi-skilled or unskilled workers.
The right hon. Member for Brent, North (Sir R. Boyson) has been cited with acclamation many times in this debate. His most profound point about the scheme is that, even in its own terms, it is failing because there is no evidence that the children taking up places are from not only the poorest families but the poorest schools. For the scheme to make any sort of sense, it would take the most able children from the most failing schools. It would then be doing something significant. As the right hon. Gentleman argued—this is clearly true—the scheme is probably taking children with the most motivated parents, who ensure that they secure the best schools in the neighbourhood for their children. Therefore, the scheme is failing on a fundamental ground.
The scheme is transferring large sums of public money from the Exchequer to private schools. I shall not explore that matter, as other hon. Members have done so. Here we have a scheme with expanding and—in some senses—uncontrollable costs. It has problems with take-up and is substantially missing its intended targets.
What should a sensible Government do when faced with such a scheme? The Government are desperate to cut public spending—they are imposing VAT on domestic fuel and targeting the social security budget. Yet in those circumstances, and faced with a scheme with those characteristics, they spend more on it. Because they are spending more on this scheme, they are necessarily spending less on everything else. They are certainly spending less on other things in the education system of which we have no trouble assembling a list.
In conclusion, we should let this ill-conceived scheme wither on the vine. Anyone who examined the scheme would say that that is the most sensible thing to do. Indeed, all those who have examined the scheme sensibly say that that is the most sensible thing to do.
We should do something else—we should rescue the kernel of an idea that has got lost as the scheme has developed. We should do all that we can to nourish the academically able, especially those from academically and financially disadvantaged backgrounds. That is an educational task. I have some sympathy with what the hon. Member for Buckingham (Mr. Walden) said. In other words, there is a completely different educational agenda from that which the scheme represents.

Mr. Nicholas Winterton: I am listening to the hon. Gentleman with great interest and finding some common ground with him. He said that he would like to do more for the academic child from a deprived or difficult background. He has not explained how he would do that, an omission that I hope he will remedy before he concludes. Having many years ago been governor of the Queen Elizabeth grammar school in Atherstone in north Warwickshire, I assure him that that wonderful school, before it was forced to go comprehensive, did precisely what he is now putting to the House.

Dr. Wright: I am grateful to the hon. Gentleman for that intervention. An obvious example is large classes. We have recently confirmed evidence that there is a direct correlation between reduced class sizes and increased academic performance. The figures show that under the Conservatives class sizes have increased substantially. If the Government's objective were increased academic achievement, they would have followed the strategy of reducing class sizes.
The hon. Member for Macclesfield (Mr. Winterton) gave an interesting example, but I prefer to close with an example of my own, which is about the numbers entering university. The figures are shocking, and I simply relay them to the House. In England and Wales, 30 per cent. of university entrants come from private fee-paying schools, despite the fact that only 7·5 per cent. of school-leavers come from such schools.
If the Government were serious about wishing to make higher education available to all who might benefit from it, especially those from deprived and disadvantaged backgrounds, they would regard that figure as shocking and would devote greater energy to opening up the higher education system to children from such backgrounds.
Sadly, the Government have not done that, but are instead pursuing schemes such as the one before the House tonight. That is why we say that their proposal is completely irrelevant to what is required. By transferring public money in the way they propose, they are simply sustaining, propping up and further developing a system of schooling which, as the hon. Member for Buckingham said, has been one of the most damaging and divisive things to have happened to this country.

Mr. Forth: Tempted though I am, I shall not indulge in a debate on the principle of the scheme because I should be called to order. As I said at the outset, this is a narrow debate on the regulations.
I had some difficulty understanding the arithmetic of the hon. Member for Bridgend (Mr. Griffiths). My arithmetic suggests that if he took the total amount spent on this excellent scheme and spread it among all the pupils in the maintained sector, he might reach the total of about £13 per pupil. I am not sure what dramatic difference that would make to the quality and standard of education. I leave him to draw his own conclusion.
About 69 per cent. of pupils on the assisted places scheme come from the maintained schools sector, well exceeding the 60–40 rule that we set out for the scheme. That gives the lie to the facts that were claimed by Opposition Members, not least the hon. Member for City of Durham (Mr. Steinberg) who, in a rather pathetic parade of class-ridden prejudice of a kind that we have come to expect from him, completely ignored the facts.
For example, the hon. Gentleman ignored the fact that 56 per cent. of parents whose children go on the assisted places scheme earned less than £12,000 last year, and that 38 per cent.—about two out of every five—earn less than £9,000 per annum. How they represent the elite he claimed were taking advantage of the scheme is beyond me. I should have thought that such people might even have qualified for his soubriquet of the working class or manual working people of whom he approves. I suggest that he looks again at the statistics to see whether his class profile might be suggested to the House in a different form.
The hon. Gentleman has suggested that the scheme may not deliver quality. The achievements of assisted pupils in terms of GCSEs, A-levels and AS-levels are well above the national pass-grade result, and fully comparable with the achievements of the independent sector as a whole. All the evidence suggests that the achievements of pupils on the scheme compares very well with those of others—which contradicts what some Opposition Members have suggested.

Mr. Don Foster: Surely the Minister accepts that children selected according to ability are expected to do well in examinations. What he is telling us is no surprise; it is a repeat of what he said last year. Will he now tell us the evidence of added value from the scheme?

Mr. Forth: We are all repeating what we said last year. What mystifies me is why we have these debates annually, but if Opposition Members persist in coming to the House at this late hour and making the same speeches every year, I do not see why I should not do the same.
The fact is that all the evidence suggests that pupils whose parents put them forward for this excellent scheme fully vindicate not only the scheme and their parents' choice of education, but the schools that then enable them to achieve excellent results—results fully comparable with the results achieved by pupils in similar schools, and way beyond those of pupils generally and those educated in the maintained sector.
As for the accusations of elitism, I believe that they have been effectively disproved—not only by the income background that I described in response to the points made by the hon. Member for City of Durham, but by my points about the excellent level of achievement.
The brief but excellent speech of my hon. Friend the Member for Buckingham (Mr. Walden) was very much in tune with the thrust of the policies of my right hon. Friend the Secretary of State, starting with the White Paper "Choice and Diversity", which was produced last year. Of course we believe that the technology schools are an exciting new development in education; I suggest that the emphasis on specialisation—that is probably the word that best sums up what my hon. Friend was talking about: drawing out young people's aptitudes, and providing them with diversity and choice in terms of different schools in their localities—must represent the way ahead. I trust that the Government are trying to encourage that approach, through our different policies in the Department and through some of the measures in the Education Bill, which will return to the House next week.
I believe that these narrow regulations build on a scheme that has been in place for some time.

Mr. Win Griffiths: I asked for clarification earlier on a point that strikes me as rather important. According to page 2 of the Department's report of its expenditure plans, the estimated outturn for the scheme in 1992–93 is £78 million. The 1993–94 plans involve expenditure of £95 million—an extra £17 million.
On page 16–where the Government show the figures for the number of places available—it is made clear that, for that extra £17 million, only 286 places will be available. That is equivalent to nearly £60,000 per place. What is the reason for the big increase in spending and the small increase in numbers?

Mr. Forth: I will give the hon. Gentleman an off-the-cuff reply and write to him in more detail subsequently.
I believe that the missing link is take-up. I must confess that, every year, we have been embarrassed by the fact that the scheme exceeds all our expectations. Year upon year, more people than even we anticipated take up their places in the scheme, and we then find that we have to provide yet more money, which we gladly do every year. But it is an annual embarrassment to which I am very happy to confess. That is probably the reason for the gap that the hon. Gentleman is seeking to understand.

Mr. Win Griffiths: I certainly would appreciate a full answer, because I am not entirely convinced by that. In table 10, giving the number of places available, it is pointed out that at the moment the new places being made available are almost all being taken up. Last year, 97·6 per cent. were taken up. So there is not much room for a greater take-up. I appreciate that higher up there are some big gaps, but surely that cannot be the answer.

Mr. Forth: I believe that this is the answer. What certainly is not the case is that we are providing places at £60,000 each. Even some of the more exotic schools mentioned by hon. Gentlemen do not quite reach that fee level. It is most unlikely, to say the least, that the Department is funding places to the tune of £60,000 per place.
I will write to the hon. Gentleman and give him a very full explanation of this, because it seems that we are unable at this stage to agree.
I hope that I have persuaded the House—

Mr. Steinberg: The Minister accused me of being class-prejudiced, and perhaps I am. When I look at the other side of the House, that makes me class-prejudiced. The statistics that I gave him had not been produced by me; they were produced by the ISIS MORI poll, which said that 60 per cent. of the children came from middle-class homes, including Lloyd's, the civil service, and so on. So is the Isis MORI poll class-prejudiced as well?

Mr. Forth: I cannot imagine why the hon. Gentleman should disapprove of teachers and civil servants; that is beyond me and is for him to explain on some other occasion. From the facts that I gave—these are the more relevant ones, I believe—over half the parents of children in assisted places scheme places have incomes of less than £12,000 per annum.
I will not follow the hon. Gentleman's obsession with what their occupations are. I am much more interested in the fact that the scheme is doing what it was set up to do—that is, helping those on low incomes to get their children into good schools.

Mr. Derek Enright: I would like to know the source of the Minister's information, quite simply.

Mr. Forth: The source of my information is the underpaid and overworked civil servants in my Department.
I hope that in this short debate I have been able to persuade the House that we should approve these excellent regulations, which update this excellent scheme, from which so many of our children benefit.

Question put:—

The House divided: Ayes 229, Noes 177.

Division No. 332]
[11.22 pm


AYES


Ainsworth, Peter (East Surrey)
Evennett, David


Aitken, Jonathan
Faber, David


Alexander, Richard
Fabricant, Michael


Allason, Rupert (Torbay)
Fenner, Dame Peggy


Amess, David
Fishburn, Dudley


Ancram, Michael
Forman, Nigel


Arnold, Jacques (Gravesham)
Forsyth, Michael (Stirling)


Arnold, Sir Thomas (Hazel Grv)
Fox, Dr Liam (Woodspring)


Ashby, David
Freeman, Rt Hon Roger


Aspinwall, Jack
French, Douglas


Atkins, Robert
Gallic Phil


Atkinson, David (Bour'mouth E)
Gardiner, Sir George


Atkinson, Peter (Hexham)
Gill, Christopher


Baker, Rt Hon K. (Mole Valley)
Gillan, Cheryl


Baker, Nicholas (Dorset North)
Gorman, Mrs Teresa


Baldry, Tony
Gorst, John


Banks, Matthew (Southport)
Greenway, Harry (Ealing N)


Banks, Robert (Harrogate)
Greenway, John (Ryedale)


Bates, Michael
Griffiths, Peter (Portsmouth, N)


Batiste, Spencer
Grylls, Sir Michael


Beggs, Roy
Hague, William


Bellingham, Henry
Hamilton, Rt Hon Archie (Epsom)


Bendall, Vivian
Hamilton, Neil (Tatton)


Blackburn, Dr John G.
Hampson, Dr Keith


Bonsor, Sir Nicholas
Hargreaves, Andrew


Boswell, Tim
Haselhurst, Alan


Bowden, Andrew
Hawkins, Nick


Bowis, John
Hawksley, Warren


Brandreth, Gyles
Hayes, Jerry


Brazier, Julian
Heald, Oliver


Bright, Graham
Heathcoat-Amory, David


Brown, M. (Brigg & Cl'thorpes)
Hendry, Charles


Browning, Mrs. Angela
Hill, James (Southampton Test)


Budgen, Nicholas
Horam, John


Burns, Simon
Howard, Rt Hon Michael


Burt, Alistair
Howarth, Alan (Strat'rd-on-A)


Butler, Peter
Howell, Sir Ralph (N Norfolk)


Carlisle, Kenneth (Lincoln)
Hughes Robert G. (Harrow W)


Carrington, Matthew
Hunt, Sir John (Ravensbourne)


Carttiss, Michael
Jack, Michael


Channon, Rt Hon Paul
Jackson, Robert (Wantage)


Clappison, James
Jenkin, Bernard


Clarke, Rt Hon Kenneth (Ruclif)
Jessel, Toby


Clitton-Brown, Geoffrey
Jones, Robert B. (W Hertfdshr)


Coe, Sebastian
Key, Robert


Colvin, Michael
Kilfedder, Sir James


Congdon, David
King, Rt Hon Tom


Conway, Derek
Kirkhope, Timothy


Coombs, Anthony (Wyre For'st)
Knapman, Roger


Coombs, Simon (Swindon)
Knight, Mrs Angela (Erewash)


Cope, Rt Hon Sir John
Knight, Greg (Derby N)


Couchman, James
Kynoch, George (Kincardine)


Cran, James
Lait, Mrs Jacqui


Currie, Mrs Edwina (S D'by'ire)
Lawrence, Sir Ivan


Curry, David (Skipton & Ripon)
Legg, Barry


Davies, Quentin (Stamford)
Lidington, David


Day, Stephen
Lightbown, David


Deva, Nirj Joseph
Lloyd, Peter (Fareham)


Devlin, Tim
Lord, Michael


Dicks, Terry
Luff, Peter


Douglas-Hamilton, Lord James
MacGregor, Rt Hon John


Dover, Den
MacKay, Andrew


Duncan, Alan
McLoughlin, Patrick


Duncan-Smith, Iain
McNair-Wilson, Sir Patrick


Durant, Sir Anthony
Maitland, Lady Olga


Dykes, Hugh
Malone, Gerald


Eggar, Tim
Mans, Keith


Elletson, Harold
Marlow, Tony


Emery, Rt Hon Sir Peter
Marshall, Sir Michael (Arundel)


Evans, Jonathan (Brecon)
Martin, David (Portsmouth S)


Evans, Nigel (Ribble Valley)
Mawhinney, Dr Brian


Evans, Roger (Monmouth)
Mayhew, Rt Hon Sir Patrick





Merchant, Piers
Spink, Dr Robert


Mills, Iain
Spring, Richard


Mitchell, Andrew (Gedling)
Sproat, Iain


Moate, Sir Roger
Squire, Robin (Hornchurch)


Montgomery, Sir Fergus
Steen, Anthony


Moss, Malcolm
Stephen, Michael


Neubert, Sir Michael
Stern, Michael


Newton, Rt Hon Tony
Stewart, Allan


Nicholls, Patrick
Sweeney, Walter


Nicholson, Emma (Devon West)
Sykes, John


Norris, Steve
Taylor, Ian (Esher)


Onslow, Rt Hon Sir Cranley
Taylor, John M. (Solihull)


Oppenheim, Phillip
Thomason, Roy


Ottaway, Richard
Thompson, Sir Donald (C'er V)


Page, Richard
Thompson, Patrick (Norwich N)


Paice, James
Thornton, Sir Malcolm


Patnick, Irvine
Thurnham, Peter


Pattie, Rt Hon Sir Geoffrey
Townend, John (Bridlington)


Pawsey, James
Townsend, Cyril D. (Bexl'yh'th)


Peacock, Mrs Elizabeth
Tredinnick, David


Pickles, Eric
Trend, Michael


Porter, David (Waveney)
Twinn, Dr Ian


Portillo, Rt Hon Michael
Walden, George


Powell, William (Corby)
Waller, Gary


Redwood, Rt Hon John
Ward, John


Richards, Rod
Wardle, Charles (Bexhill)


Riddick, Graham
Waterson, Nigel


Rifkind, Rt Hon. Malcolm
Watts, John


Roberts, Rt Hon Sir Wyn
Wells, Bowen


Robertson, Raymond (Ab'd'n S)
Whitney, Ray


Robinson, Mark (Somerton)
Whittingdale, John


Ross, William (E Londonderry)
Widdecombe, Ann


Rowe, Andrew (Mid Kent)
Wiggin, Sir Jerry


Ryder, Rt Hon Richard
Wilkinson, John


Sackville, Tom
Willetts, David


Shaw, David (Dover)
Winterton, Mrs Ann (Congleton)


Shaw, Sir Giles (Pudsey)
Winterton, Nicholas (Macc'f Id)


Shepherd, Colin (Hereford)
Wood, Timothy


Shepherd, Richard (Aldridge)
Yeo, Tim


Sims, Roger
Young, Rt Hon Sir George


Smith, Tim (Beaconsfield)



Speed, Sir Keith
Tellers for the Ayes:


Spencer, Sir Derek
Mr. Sydney Chapman and Mr. James Arbuthnot.


Spicer, Sir James (W Dorset)



Spicer, Michael (S Worcs)





NOES


Abbott, Ms Diane
Clwyd, Mrs Ann


Adams, Mrs Irene
Coffey, Ann


Ainger, Nick
Connarty, Michael


Ainsworth, Robert (Cov'try NE)
Cook, Frank (Stockton N)


Anderson, Donald (Swansea E)
Cook, Robin (Livingston)


Armstrong, Hilary
Corston, Ms Jean


Ashton, Joe
Cox, Tom


Austin-Walker, John
Cryer, Bob


Barnes, Harry
Cunliffe, Lawrence


Battle, John
Cunningham, Jim (Covy SE)


Bayley, Hugh
Cunningham, Rt Hon Dr John


Beith, Rt Hon A. J.
Darling, Alistair


Benn, Rt Hon Tony
Davidson, Ian


Benton, Joe
Davies, Bryan (Oldham C'tral)


Berry, Dr. Roger
Davies, Ron (Caerphilly)


Betts, Clive
Davis, Terry (B'ham, H'dge H'I)


Boyce, Jimmy
Dewar, Donald


Bradley, Keith
Dixon, Don


Bray, Dr Jeremy
Dobson, Frank


Brown, Gordon (Dunfermline E)
Donohoe, Brian H.


Brown, N. (N'c'tle upon Tyne E)
Dowd, Jim


Byers, Stephen
Dunnachie, Jimmy


Caborn, Richard
Dun woody, Mrs Gwyneth


Callaghan, Jim
Eagle, Ms Angela


Campbell, Mrs Anne (C'bridge)
Eastham, Ken


Campbell, Menzies (Fife NE)
Enright, Derek


Campbell-Savours, D. N.
Etherington, Bill


Cann, Jamie
Evans, John (St Helens N)


Chisholm, Malcolm
Fisher, Mark


Clapham, Michael
Flynn, Paul


Clark, Dr David (South Shields)
Foster, Rt Hon Derek


Clarke, Eric (Midlothian)
Foster, Don (Bath)


Clelland, David
Foulkes, George






Fyfe, Maria
Morris, Estelle (B'ham Yardley)


Galloway, George
Mowlam, Marjorie


Gapes, Mike
Mullin, Chris


George, Bruce
Murphy, Paul


Gerrard, Neil
O'Brien, Michael (N W'kshire)


Godman, Dr Norman A.
O'Brien, William (Normanton)


Golding, Mrs Llin
O'Hara, Edward


Gordon, Mildred
Olner, William


Graham, Thomas
O'Neill, Martin


Griffiths, Win (Bridgend)
Patchett, Terry


Gunnell, John
Pickthall, Colin


Hall, Mike
Pike, Peter L


Hanson, David
Powell, Ray (Ogmore)


Hardy, Peter
Prentice, Ms Bridget (Lew'm E)


Harman, Ms Harriet
Prentice, Gordon (Pendle)


Heppell, John
Prescott, John


Hill, Keith (Streatham)
Primarolo, Dawn


Hinchliffe, David
Purchase, Ken


Hogg, Norman (Cumbernauld)
Quin, Ms Joyce


Home Robertson John
Raynsford, Nick


Hoon, Geoffrey
Reid, Dr John


Howarth, George (Knowsley N)
Rendel, David


Howells, Dr Kim (Pontypridd)
Robertson, George (Hamilton)


Hughes, Kevin (Doncaster N)
Roche, Mrs Barbara


Hughes, Simon (Southwark)
Rooker, Jeff


Illsley, Eric
Rooney, Terry


Ingram, Adam
Rowlands, Ted


Jackson, Glenda (H'stead)
Short, Clare


Jackson, Helen (Shef'ld, H)
Simpson, Alan


Jones, Barry (Alyn and D'side)
Skinner, Dennis


Jones, Lynne (B'ham S O)
Smith, Andrew (Oxford E)


Jones, Martyn (Clwyd, SW)
Smith, C (Isl'ton S & F'sbury)


Jowell, Tessa
Smith, Llew (Blaenau Gwent)


Kennedy, Jane (Lpool Brdgn)
Spearing, Nigel


Kilfoyle, Peter
Steel, Rt Hon Sir David


Kinnock, Rt Hon Neil (Islwyn)
Steinberg, Gerry


Leighton, Ron
Stevenson, George


Lloyd, Tony (Stretford)
Strang, Dr Gavin


Loyden, Eddie
Taylor, Matthew (Truro)


McAllion, John
Turner, Dennis


McAvoy, Thomas
Tyler, Paul


McCartney, Ian
Wardell, Gareth (Gower)


Macdonald, Calum
Wareing, Robert N


McKelvey, William
Watson, Mike


McLeish, Henry
Wicks, Malcolm


McMaster, Gordon
Williams, Alan W (Carmarthen)


Madden, Max
Wilson, Brian


Mahon, Alice
Winnick, David


Marshall, David (Shettleston)
Wise, Audrey


Marshall, Jim (Leicester, S)
Worthington, Tony


Martlew, Eric
Wray, Jimmy


Meale, Alan
Wright, Dr Tony


Michie, Bill (Sheffield Heeley)
Young, David (Bolton SE)


Milburn, Alan



Miller, Andrew
Tellers for the Noes:


Mitchell, Austin (Gt Grimsby)
Mr. John Spellar and Mr. Andrew Mackinlay.


Morgan, Rhodri



Morley, Elliot

Question accordingly agreed to.

Resolved,
That the draft Education (Assisted Places) (Amendment) Regulations 1993, which were laid before this House on 29th June, be approved.

Company Accounts

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): I beg to move, That the draft Partnerships and Unlimited Companies (Accounts) Regulations 1993, which were laid before this House on 21st June, be approved.
Accounting requirements for companies in the European Community have been harmonised, principally through the fourth and seventh company law directives, but there was concern that companies in some member states were avoiding the disclosure requirements of those directives by conducting business through the equivalent of partnerships. The Council therefore adopted the partnerships directive to bring partnerships between limited companies and unlimited companies owned by limited ones within the scope of the accounting directives, requiring them to produce and publish accounts.
In Great Britain the directive and thus these regulations apply to partnerships, limited partnerships and unlimited companies where all the members with unlimited liability are themselves limited companies. For a limited partnership it is the nature of the general partner or partners only—the ones with unlimited liability—that matters.
To be within the scope of the regulations the general partner or partners must be limited companies. The regulations will not apply to most partnerships in Great Britain, such as those between accountants, solicitors and small traders, where one or more of the partners is a natural person, not a company. Partnerships between limited companies, or where the general partners are limited companies, are not thought to be particularly common in Great Britain. In fact, they amount to only about 3,500 out of 600,000.
We consulted business and others on the line to be taken in the negotiation of the directive. The conclusion of that consultation was that partnerships between companies, or where the general partner is a company, were not being used as a vehicle to avoid disclosure, the problem with which the directive seeks to deal. Our negotiators strove, therefore, to achieve sufficient options in the directive to ensure that existing practice in Great Britain could continue to be followed as far as possible.
It is important for those dealing with a partnership or unlimited company to know that its members or general partners are limited companies. The liability of members or general partners is unlimited, but, if they are limited companies and the debts of the partnership force them into liquidation, the creditors of the partnership would become unsecured creditors of the company up to the limits of the capital of the company. It is equally important for those dealing with and investing in a company to know that it has exposure to unlimited liability through partnerships and unlimited companies.
The regulations provide three ways in which accounting information about the partnership can be handled, depending on the circumstances. There are also provisions that apply to all companies and partnerships which are within the scope of the regulations, no matter which accounting treatment is used. The members of a partnership must give inquirers the name of at least one company member that has included the partnership in its accounts, or the names of all the company members that


are publishing its accounts. Companies which are involved in partnerships or unlimited companies within the scope of these regulations must reveal their names and addresses and legal forms. The companies must also state in their accounts where the accounting information about the partnership is to be found.
The directive, when implemented in all member states, will require all companies incorporated in the Community to give such information about the partnerships and unlimited companies within its scope of which they are members. That will help companies in Britain to find out more about the companies that they are dealing with in other member states.
If the partnership is included in consolidated accounts by at least one of its partners, there will be no further requirement to draw up and publish accounts. The member companies must state in their accounts whether they have consolidated the partnership or whether another company has done so. In the latter case, the name of the other company must be given in the accounts.
Our aim has been to provide information for those dealing with the partnership and the company, while keeping the burdens to a minimum. My Department consulted last year on the method of implementation, and the approach that we have taken in these regulations was welcomed by the organisations that responded. We have estimated that the compliance costs will be low. A compliance cost assessment has been prepared and is available.
To give companies and partnerships the maximum time to adapt to the requirements, the directive permits member states not to apply its provisions to financial years commencing before 1 January 1995. The regulations would take advantage of this.
As I have explained, throughout the process of negotiation of the directive, and the consultation and drafting of these regulations, there has been no evidence that the problem with which the directive seeks to deal—the lack of disclosure of accounting information by partnerships between companies—is a problem in Britain. We therefore sought, and were successful in negotiating, options that would permit us to leave existing provisions largely intact. The regulations implement the directive in a most light-handed way.
I commend the regulations to the House.

Mr. Stuart Bell: I am grateful to the Minister for taking us rapidly through the regulations. There is usually a 10-minute speech arranged for these occasions, but I am aware of the quorum hovering in the Chamber at this hour. Therefore, I will not seek to delay the House unduly.
These regulations implement a Council directive dealing with annual accounts and consolidated accounts. They confirm again, if confirmation is necessary, that we are within the European framework, that we have been in a European framework for some 20 years now, and that we are developing that framework along lines of which even the noble Lady Thatcher would approve. We are creating harmonious conditions throughout the length and breadth of Europe so that company law and accountancy law are the same in all European countries.
Regulations such as these create a level playing field that companies will come to know and understand. The time may come when we will be debating a European company which is trans-national and which will incorporate the whole of our European company law. Indeed, such a law has been debated for the past 20 years, but it has yet to make its way on to the statute book. Perhaps with debates and regulations such as these we shall be able, little by little, to creep towards it.
The scope of the application of the regulations concerns partnerships, limited partnerships and unlimited companies, all of whose members, having unlimited liability, are limited companies. That may seem like gobbledegook to you, Mr. Deputy Speaker, but for the cogniscenti, it means that there is a difference in liability for partnerships and unlimited companies when compared to those that have limited their liability by incorporating themselves into limited liability companies.
There is a significant difference in the treatment of trading companies and partnerships not limited by liability and those which are. We shall debate that difference in greater detail and whether they should be subject to audit when we have the Minister's proposals for small businesses. It will be the Opposition's submission at that time that limited liability companies that do not wish to submit themselves to an audit should disincorporate themselves—take unlimited liability—with all its attendant risks, while leaving limited liability companies properly audited in the interests of full disclosure and in the interests of work force, bankers and outside parties, which may be shareholders. That is also for another debate, but it might be as well to put down a marker for the Minister's attention.
As I understand it—I am grateful to the Minister for explaining this to me—there are occasions, principally in Germany, where partnerships gather together from limited liability companies. Those dealing with such partnerships may do so on the basis that there is unlimited liability upon the partnership. As the Minister said, that is not often the case in our country, and it is not likely that such situations will arise, or, if they do, it will not be very often. Nevertheless, it is appropriate that there should be a common framework throughout the Community so that those dealing with such partnerships will know where they stand and will act accordingly.
As we read Sir Andrew Large's critique of our self-regulation organisations—acting within his Securities and Investment Board—it is being drummed into us that the principles of caveat emptor can never be removed from financial investment. There will always be an element of risk. Regulations such as these, bringing in their wake full disclosure, will provide the information for the investor to take into account when he takes his investment decisions and risks his money.

Mr. Tim Devlin: The hon. Gentleman is an expert in French law and has practised at the French Bar. Can he tell us, with regard to partnerships, whether the same rules or uberrima fides-the utmost good faith—apply in other European countries as they do in Great Britain?

Mr. Bell: They certainly do. As I said earlier, one of the reasons for this directive is that it will cover the whole of


Europe so that the principles and concepts to which the hon. Gentleman referred conform with what we are debating and what we have in our country.
The Minister said that compliance would not be costly. It would be nice to look on the measure as constituting a mini securities and exchange commission, with its imposition of criminal penalties for failure to comply with the regulations. But of course such penalties already exist within the framework of the Financial Services Act 1986 and the Companies Act 1989. Still, it is nice to see the extension of criminal penalties for failure to comply with financial regulations, which edges us further towards the sort of statutory regulation which no doubt we will debate on the Floor of the House and towards which, if I have read Sir Andrew Large's report aright, even the Government are edging.
I promised the Minister not to have too long a saunter around the paddock of regulation and self-regulation, independent or statutory, and I hope that I have not done so. One of the difficulties of opening debates such as this one is that I cannot respond to any speech that the hon. Member for Mid-Staffordshire (Mr. Fabricant) may make later. If he does make one, I shall listen to it with great interest. If he does not, I remind him that the best speeches can be kept for another occasion.
I assure the serried ranks of Conservative Members who are waiting to go home that none of my hon. Friends is loitering in the Corridors waiting to cast a vote or to press the button that will ring the Division bell. I thank the Minister for his courtesy and patience in explaining these technical but important regulations to the House. The attendance may have been a bit thin, but I assure him that his comments—and mine, I hope—will read well in Hansard tomorrow.

Mr. Neil Hamilton: With the leave of the House, I will not reply to the debate.

Question put and agreed to.

Resolved,
That the draft Partnerships and Unlimited Companies (Accounts) Regulations 1993, which were laid before this House on 21st June, be approved.

ESTIMATES

Motion made, and Question put forthwith, pursuant to Standing Order No. 131 (Liaison Committee),

That this House agrees with the Report [8th July] of the Liaison Committee.—[Mr. Wood.]

Question agreed to.

Charities (Collections)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kirkhope.]

Sir Jim Spicer: We were treated to a remarkable degree of brevity in the last debate, and I too will take only a few minutes. My purpose is not to raise any major issue but to fire a warning shot across the Minister's bows.
We have a remarkable tradition of charitable giving, which no other country in the world can equal or surpass. Part of that tradition is that we give freely, but over the years more and more charities have asked for our support, so it is quite right that we should impose certain controls on them, particularly when it comes to door-to-door collections.
In 1939, the House to House Collections Act was passed. It was adequate then, but given the number of charities today it is no longer so. Since 1939 there has been an explosion, not only in the number of charities, but in the energy and time that they devote to fund raising and door-to-door and street collections. It is therefore crucial that good controls should be exercised by authorities close to the areas where the collecting is to be done.
At first sight—certainly to a newcomer to the subject like me—local control by the district council seems the answer. That brings me to the reason why I asked for this debate.
We are raising money for a local hospice. For an area like west, south and north Dorset to raise £3·4 million in just over two years is quite an achievement. We have a target of £5 million, and I hope and expect that, by the end of next year, we shall have raised that money and the hospice will be opened. We were all—particularly my wife—delighted when we were granted a licence for one week for the whole of west Dorset to raise funds for our local hospice.
An immediate operation was set in train, which involved the distribution of some 200 to 300 tins, with all the paraphernalia—badges and other things—that go along with such an operation to ensure that we would raise the maximum amount. Every town, village and hamlet in west Dorset was covered, and people were prepared to go out to raise the money. I am always an optimist, and I thought that we would raise about £20,000 to add to the £3·4 million. In fact, we raised just half that sum.
Why did we not get anywhere near that target, when everyone locally supports the hospice project and wants to see it open? Before we started the week allocated to us, people began to phone in and say that, although they would like to help, sadly, they did not think that they could, because other charities were to be collecting that week. As the week progressed, more and more people phoned in and asked what was going on. It was nonsense, they said. They thought that they had the total licence and nobody would be in competition, but moving down the street at the same time as they were trying to collect were at least four other charities—Barnardos, the Diabetic Association, Action Aid and the Alexandra Rose. All those four charities were actively collecting, on the basis that they had exemption from registering because they were large, national charities.
That is our problem, and we were saddened by what had happened to Joseph Weld house. On Monday


morning, I received a letter from Mr. Wilson, who is the divisional superintendent of our local St. John Ambulance. He said:
I would like to make a formal, written complaint with regard to the fund-raising collection which took place in Dorchester and District between 25th June and 3rd July, 1993.
As I am the Superintendent of the Dorchester Combined Division of St. John Ambulance, I feel partly responsible for the situation as members of the public, understandably, felt aggrieved at what appeared to be constant requests for money. Some of my members received a very poor, even hostile, reception when selling flags.
As you know, our organisation is entirely voluntary and we are allocated one week each year for our Flag Day and House to House collections. Normally this is well supported, but this year we fell some £300 below our anticipated total. I believe that this is almost entirely due to the Dr. Barnardo's collection being held during the same week.
My main point is: why should we suffer these losses when we rely on the funds raised at this time? We are required to register well in advance and try to avoid competing with other Charities. Other organisations, however, are not required to register and can therefore collect at any time.
I should be grateful if you would raise my concerns with the appropriate authorities.
That rather indignant letter joins the indignant protests of my wife as the organiser of our fund-raising activity during that week.
However, it is a fact—I am quite certain that the Minister will bear witness to this—that things are going to change. Therefore, as I said at the beginning, all I intend to do is fire a shot across my hon. Friend's bows and say that the present situation cannot be allowed to continue.
My aim tonight is to highlight the present unsatisfactory situation that puts smaller and particularly local charities at a disadvantage and to seek from my hon. Friend an absolute assurance not only that, under the Charities Act 1992, there will be a tightening up, but that all charities will be required to register with local authorities and that small, but local, charities, will have their absolutely fair share of time.
I am president of my local British Legion. It would be inconceivable to me that, during that week, we should not devote all our thoughts and attention to the poppy day appeal. However, it seems that at least 50 per cent. of the year should be devoted to local charities. Otherwise, the 50 or so charities that have exemption at present can run roughshod over our local activity, push us to the wall and make our fund-raising insignificant.
That should not be allowed to happen. All I seek tonight is an assurance from my hon. Friend that we will see a change by early 1994, that more control will be vested locally, and that the national charities will not be given the free rein that they have at the moment.

The Minister of State, Home Office (Mr. Peter Lloyd): I congratulate my hon. Friend the Member for Dorset, West (Sir J. Spicer) on securing this debate. The fact that we are here at this comparatively late hour attests to the importance that he rightly attaches to the issue.
Before I address the particular matter of his concern and what he called his warning shot, I should say that I am pleased that he drew my attention and that of the House to the excellent work of the Dorset respite and hospice trust in his constituency. I share the public's admiration

for those who care so compassionately for the terminally ill and give vital emotional support to their friends and relatives. That work requires great sensitivity and devotion; I pay tribute to what they are doing and applaud their extremely impressive efforts, which my hon. Friend described, to raise new funds to extend their work further.
As my hon. Friend explained so clearly, the very business of fund raising has brought him to this debate tonight. He described how the hospice's dedicated fund raisers, not least his wife, had planned their house-to-house collection and notified that to the local authority, and were then unhappy to find that other large national charities were also making house-to-house collections that evening.
I can understand those people feeling that they were all treading on each other's toes, and that their hospice cannot but have raised less than it would have done if the collectors had had a clear run on their own. I can also understand why my hon. Friend feels that there should be effective rules to avoid such an overlap. However, as he said, there are a large number of charities in England and Wales. More than 160,000 charities are registered with the Charity Commission. A good number of them are very small, many are confined to one area and some are very large indeed.
Altogether, the income of all charities in England and Wales has been estimated at perhaps £18 billion a year. While public charitable collections are only one source of that income, the net effect is that there is considerable pressure and, indeed, competition for the public's generosity.
The first main point that I must make in reply to my hon. Friend is that no one charity could, in all reasonableness, expect to have a monopoly on charitable appeals at any one time, even briefly and locally, unless other charities were correspondingly to be prevented from fund raising.
Even if public charitable collections were to be given over—briefly and locally—to a single charity, others would be free to compete in the same area and at the same time through other means of fund raising, such as direct mail, newspaper appeals and telephone fund raising.
Considerable overlap is, I fear, inevitable, and something that we must accept. My hon. Friend suggested that house-to-house collections by the larger charities should be confined to one half of the year only, but that would restrict those that have currently secured eligibility for an exemption order, issued by my right hon. and learned Friend the Secretary of State.
The law currently regulates collections under the House to House Collections Act 1939 and, in relation to street collections, the Police, Factories, etc (Miscellaneous Provisions) Act 1916. Only the 1939 Act provides for large national house-to-house collections to be granted an exemption order, removing them from local control. No equivalent provision exists in the 1916 Act, so permission for street collections—the familiar member of the public with the collecting can in the town centre on a Saturday—must always be applied for from each local authority.
Larger charities granted exemption orders by my Department for house-to-house collections are asked to notify local authorities in whose area they intend to collect. From time to time, they are reminded of the need to do so. Conversely, West Dorset district council and other local authorities, as a matter of good practice, point out to local charities that exemption-order-holding


charities may collect in the same area, and that those local charities cannot be guaranteed a monopoly. It may be constructive for those directly concerned to contact one another in order to co-ordinate their collections and minimise overlap.
I do not know what happened in the particular case to which my hon. Friend referred; certainly things did not appear to go as well as they might have done. I agree with him that it is anomalous that street and house-to-house collections for very similar purposes are controlled through separate primary legislation. That was remarked on by the efficiency scrutiny of the supervision of charities, chaired by Sir Philip Woodfield, in 1987. The proposal implemented through the Charities Act 1992 was to bring both types of collection together under more consistent legislation. In the 1992 Act, that type of joint activity is covered by the term "public charitable collection".
We are currently examining, as my hon. Friend accepted, how the new provisions can best be brought into force. We intend to complete that process by the end of next year. We must take into account many practical angles, such as the co-ordination of different collections between competing charities, including between permission to collect that is granted centrally under 1992 Act, from the Charity Commission, and that granted locally by district authorities.
I cannot promise my hon. Friend that any one type of charity or issuing authority will necessarily take precedence over another, but I agree that the issue should

be thoroughly examined before a decision is made on what seems best. This debate represents a timely and constructive contribution to that examination and my hon. Friend's proposal, which, in effect, is for some form of rationing, is one of the possible new arrangements that we will consider.
Close consultation with various people and organisations that have first-hand knowledge is indispensable. Our intention to discuss new arrangements for public charitable collections with experienced practitioners follows similar initiatives that we have already taken in relation to the provisions of the 1992 Act dealing with charity accounts and the control of professional fund raising.
We are making good progress in implementing the new legislation, and this week we are issuing a consultation document on the control of professional fund raising. That has undoubtedly been strengthened with the benefit of practitioners' views.
My hon. Friend's suggestions and the particular experience of the Dorset respite and hospice trust will help to ensure that the forthcoming regulations under the appropriate provisions of the 1992 Act will be constructed wisely and effectively. I hope that they will do much to avoid the type of situation that my hon. Friend has rightly drawn to the attention of the House.

Question put and agreed to.

Adjourned accordingly at four minutes past Twelve midnight.